City of Clayton, California Annual Financial Report For the Year Ended June 30, 2022
INTRODUCTORY SECTION
Comprehensive Annual Financial Report
For the year ended June 30, 2022
Table of Contents
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INTRODUCTORY SECTION |
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1 |
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Table of Contents………………………………………………………………………………. |
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Letter of Transmittal…………………………………………………………………………… |
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Mission Statement……………………………………………………………………………... |
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Organizational Chart…………………………………………………………………………... |
10 |
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Principal Officers, Department Heads and Advisory Bodies |
11 |
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Regional Map of Clayton and Nearby Cities |
12 |
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FINANCIAL SECTION |
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Independent Auditors’ Report……………………………. . ………………………………… |
17 |
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Management's Discussion and Analysis………………………. . . …………………………. . |
21 |
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Basic Financial Statements |
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Government-Wide Financial Statements: |
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Statement of Net Position………………………………………………. . …………… |
33 |
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Statement of Activities and Changes in Net Position………………………. . ……. |
34 |
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Governmental Fund Financial Statements: |
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Balance Sheet……………………………………………………………. . ……………. |
39 |
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Reconciliation of Governmental Funds Balance Sheet to the Statement of |
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Net Position………………………………………………………………………… |
42 |
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Statement of Revenues, Expenditures and Changes in Fund Balances…………. . |
43 |
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Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and |
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Changes in Fund Balances to the Statement of Activities and Changes in Net |
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Position…. . . ……………………………………. . …………. . . |
45 |
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Proprietary Fund Financial Statements: |
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Statement of Net Position………………………………………. . …………………… |
47 |
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Statement of Revenues, Expenses and Changes in Net Position…………. . . ……. . |
48 |
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Statement of Cash Flows……………………………………………………. . ………. |
49 |
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Fiduciary Fund Financial Statements: |
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Statement of Fiduciary Net Position…………………………………. . ……………. . |
51 |
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Statement of Changes in Fiduciary Net Position……………………. . ……………. |
52 |
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Notes to Basic Financial Statements…………………………………. . ……………………. . |
55 |
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Comprehensive Annual Financial Report
For the year ended June 30, 2022
Table of Contents
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FINANCIAL SECTION (Continued) |
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Required Supplementary Information |
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Budgetary Comparison Schedules |
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General Fund……………………………………………………. . . …………………… |
103 |
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Landscape Maintenance District ……………. …………. . . …………………………. |
104 |
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Successor Housing Agency………. . ……………. . . …………………………………. . |
105 |
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American Rescue Plan Act………. . ……………. . . …………………………………. . |
106 |
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Pension Plan Funding Status |
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Schedule of Proportionate Share of Net Pension Liability…. . ……………………. |
107 |
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Schedule of Pension Plan Contributions…. . …. . . …………………………………… |
108 |
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Other Postemployment Benefits Plan Funding Status |
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Schedule of Changes in the Net OPEB Liability and Related Ratios. ……………. |
109 |
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Schedule of OPEB Plan Contributions……. . …. . . …………………………………… |
110 |
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Notes to the Required Supplementary Information…………………………………………. |
111 |
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Supplementary Information |
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Major Funds |
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Budgetary Comparison Schedules. . . . . …………………………………………. . …… |
114 |
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Non-Major Governmental Funds Financial Statements: |
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Combining Balance Sheet………………………………………………………. . …… |
117 |
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Combining Statement of Revenues, Expenditures and Changes in Fund |
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Balances………………………………………………………. . . …………………… |
119 |
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Budgetary Comparison Schedules……………………………………. . ……………. |
121 |
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Internal Service Funds: |
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Combining Statement of Net Position. . . ………………………………. . …………… |
133 |
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Combining Statement of Revenues, Expenses and Changes in Net |
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Position…………………………………………………………. . . …………………. |
134 |
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Combining Statement of Cash Flows………………………………. . ……………… |
135 |
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Agency Funds: |
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Combining Statement of Changes in Assets and Liabilities………………. . ……. . |
137 |
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Comprehensive Annual Financial Report
For the year ended June 30, 2022
Table of Contents
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STATISTICAL SECTION (UNAUDITED) |
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Statistical Section Table of Contents………………………………………………….. |
142 |
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Financial Trends |
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Net Position by Component …………………………………………………………… |
143 |
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Changes in Net Position ………………………………………………………………. |
145 |
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Fund Balances of Governmental Funds ………………………………………………. |
147 |
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Changes in Fund Balances of Governmental Funds ………………………………….. |
149 |
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Revenue Capacity |
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Property Tax Levies and Collections …………………………………………….......... |
151 |
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Assessed Value and Estimated Actual Value of Taxable Property …………………… |
152 |
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Taxable Assessed Value by Source ……………………………………………… |
153 |
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Property Tax Rates ……………………………………………………………………. |
155 |
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Principal Property Tax Payers ……………………………………………………….. |
157 |
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Debt Capacity |
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Ratios of Debt Outstanding ………………………………………………………....... |
159 |
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Computation of Direct and Overlapping Debt ……….………………………………. |
160 |
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Legal Debt Margin …………………………………………………………………..... |
161 |
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Bonded Debt Pledged Revenue Coverage ……………………………………………….. |
163 |
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Demographic and Economic Information |
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Demographic and Economic Statistics ………………………………………………… |
164 |
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Operating Information |
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Full-time Equivalent City Employees by Function ……………………………………. |
165 |
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Operating Indicators by Function ……………………………………………………… |
167 |
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Capital Asset Statistics by Function …………………………………………………… |
169 |
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General Information ……………………………………………………………………. |
171 |
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ADDITIONAL REPORTS |
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Independent Auditors’ Report on Internal Controls over Financial Reporting |
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and on Compliance and other Matters Based on an Audit of Financial Statements |
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Performed in Accordance with Government Auditing Standards ……………………. |
173 |
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CITY COUNCIL |
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COMMUNITY |
CARL “CW” WOLFE, MAYOR |
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PETER CLOVEN, VICE MAYOR |
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DEVELOPMENT |
(925) 673‐7340 |
6000 HERITAGE TRAIL CLAYTON, CALIFORNIA 94517‐1250 |
JEFF WAN, COUNCILMEMBER |
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ENGINEERING |
(925) 969‐8181 |
TELEPHONE (925) 673‐7300 FAX (925) 672‐4717 |
JIM DIAZ, COUNCILMEMBER |
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HOLLY TILLMAN , COUNCILMEMBER |
January 23, 2023
Honorable Mayor and Members of the City Council
City of Clayton
We are pleased to submit the City of Clayton’s Annual Comprehensive Financial Report (ACFR) for the Fiscal year ended June 30, 2022. Since its incorporation, the City has submitted an annual audited Financial Report to the City Council and its citizens in accordance with California Government Code section 25253. The ACFR provides the public, businesses, property owners, investors and all interested parties with an overview of the City’s finances. It is important to note the acronym for this report has changed from CAFR to ACFR as the prior acronym can be considered an offensive racial slur and is no longer used. The information in this ACFR is prepared in accordance with Generally Accepted Accounting Principles (GAAP) and includes an “unmodified opinion” (the highest rating) on the report by an independent certified public accounting firm, Cropper Rowe, LLP.
Although we rely on the standards and expertise of these independent auditors, the responsibility for the accuracy and fair representation of the ACFR ultimately rests with City management. We believe the data presented in this Report is accurate in all material respects and all statements and disclosures have been included necessary for the reader to obtain a thorough understanding of the City’s financial activities. Management of the City has established an internal control framework that is designed both to protect the City’s assets from loss, theft, or misuse and to compile reliable and timely information for the preparation of the City’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh its benefits, the City’s framework of internal controls has been designed to provide reasonable rather than absolute assurance that its financial statements will be free from material misstatements.
For readers interested in a more detailed review of the City’s financial statements, a section in the ACFR called “Management Discussion and Analysis” (MD&A) has been included in accordance with Government Accounting Standards Board (GASB) Statement 34, Basic Financial Statements – And Management’s Discussion and Analysis – For State and Local Governments . The MD&A recounts the financial highlights of the City and provides additional analyses on the variances and trends reported as part of the financial statements. The MD&A further discloses significant items impacting the financial condition of the City and is designed to be read in conjunction with this Letter of Transmittal.
City Profile
The City of Clayton was incorporated in 1964 and is located in Contra Costa County, a suburban region in the eastern portion of the San Francisco-Bay Area. Pursuant to its adopted budget for the fiscal year ending June 30, 2022, the City has a permanent staff of 27.4 full- time equivalent employees which serves approximately 11,585 residents in a land area of approximately 4 square miles. Nestled in a small valley at the northern base of Mt. Diablo, the boundaries of the City are mostly developed with a
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Comprehensive Annual Financial Report
For the year ended June 30, 2022
Letter of Transmittal
City Profile , continued
strong community emphasis on open space preservation and maintenance of an extensive network of trails. The City continues to show strength as a safe community with attractive residential neighborhoods as a gateway to the fast paced and robust Bay Area economy.
The City operates under a Council- Manager form of government and provides many essential public services to the community. The City is governed by a five-member City Council elected at large, serving staggered terms of four years. The Mayor and Vice Mayor are selected by the City Council each year from its membership and serve one-year terms. The City Council is responsible for setting policies, adopting City ordinances, resolutions, the annual budget, appointing commissions and committees, and hiring the City Manager and City Attorney, among other key duties. The City Manager is responsible for implementing the City Council’s policies, ordinances and directives, overseeing the daily operations of the City, and appointing all department heads and through them all other employees of the City.
As presented in the City’s government-wide statement of activities, pursuant to GASBS 34, the City’s numerous departments and restricted- use funds accounting for public services are consolidated into higher-level programs , which include: public safety, public works, parks and recreation services, community and economic development, and general government. The public safety program is composed of an in-house police department, staffed with eleven (11) full-time sworn police officers and two (2) administrative personnel dedicated to the function of police services. Public works tracks the maintenance of public landscaping (i.e. street medians and shoulders, sub-division entryways, etc.), facilities, transportation infrastructure (i.e. streets, lighting, traffic signals, etc.), as well as contract City engineering services for management of the City’s Capital Improvement Program as well as land development regulatory needs. In their capacity of providing parks and recreation services, the City’s in-house maintenance department oversees the maintenance of the Clayton Community Library, the Clayton Community Park, The Grove Park, various neighborhood parks, and the historic Endeavor Hall rental facility. The community and economic development program consists of two (2) in-house staff providing planning and land-use regulatory services as well as the functions of economic development and affordable housing. Finally, the general government program reports legislative and support costs indispensable in providing in-house public services and maintains compliance an ever-expanding list of legal, fiscal and other statutory requirements imposed by the State of California.
The City’s fiscal year runs from July 1st through June 30th . Each year, the City Manager presents an annual budget to the City Council for adoption by Resolution on or before June 30th in accordance with Clayton Municipal Code section 3.02.040. On an interim basis the budget is monitored continually with the budgetary level of control maintained at the fund level.
Economic Condition and Outlook
Essentially a cul-de-sac hugging the base of acclaimed Mt. Diablo, Clayton maintains a small-town atmosphere while its relative proximity to California State Highway 24 and neighboring city BART stations make it ideal for commuters. In addition, the semi-rural setting, low crime rate and excellent middle and elementary public schools make Clayton attractive to families of all types.
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Comprehensive Annual Financial Report
For the year ended June 30, 2022
Letter of Transmittal
Economic Condition and Outlook, continued
Its residents are generally highly educated with approximately 57.8% of adults greater than age 25 having a bachelor’s degree or higher. In June of 2022, the unemployment rate of the City was 3.0%, compared to 3.20% and 4.0% for Contra Costa County and the State of California, respectively. In 2020 the median household income in the City was $153,607 compared to $87,355 for the state. The median age of Clayton residents is 43.1 as of the 2021 calendar year. The median sales price of homes in Clayton at June 30, 2022 was $ 1,050,000, a 8.7% year over year decrease. Despite this decline, property tax and sales & use tax revenues remain relatively strong.
In order, the City General Fund’s top revenue sources are: in-lieu vehicle license fees (VLF – paid from the state’s portion of property taxes); secured property taxes; franchise fees; and sales & use taxes (including the state- allocated “triple flip” prior to the fiscal year ending June 30, 2017). The following chart illustrates the ten-year trend of these four major revenue sources for the City taken from the 2022-23 Adopted Budget:
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Comprehensive Annual Financial Report
For the year ended June 30, 2022
Letter of Transmittal
Altogether, these four primary revenue sources (Property Tax In-Lieu 22.1%, Property Taxes 20.6%, Franchise Fees 10.7%, Sales and Use Taxes 10.5%) comprise 63.9% of General Fund revenues per the adopted budget for the fiscal year ending June 30, 2023. A non-recurring spike was realized in sales and use taxes six years ago in the year ended June 30, 2017 attributable to the City receiving a final true-up Triple Flip allocation from the state following the statutory dissolution of this process effective January 1, 2017. Accordingly, the following year realized a dip back to “normal” sales & use tax trend levels. In the long-run however, given the suburban composition of the City and its geographic boundaries limiting future development, management anticipates slow growth for the next ten years in sales & use taxes and franchise fees and moderate growth in property tax revenue (including in-lieu VLF property taxes received from the state) . With increasing telecommunications technologies, cable-based franchise fees could be a declining or at-risk revenue, while other factors such as weather patterns and sustainable energy trends could impact similar franchise fee revenue. Given the recent U.S. Supreme Court South Dakota v. Wayfair ruling, it is reasonably possible the City will see an increase in sales & use tax revenue in forthcoming years with the definition of eligible taxable sales transactions now potentially including all online sales where “substantial nexus” requirements exist with online sellers in California.
Long‐Term Financial Planning
As of the year ended June 30, 2022, the City of Clayton’s financial condition remains sound. An indicator of financial condition is the level of fund balances, both reserved and unreserved, in the City’s General Fund. The City Council has directed an absolute minimum reserve of $250,000 as its never-to-be-expended “catastrophic reserve.” In practice, due to the effectiveness in fiscal management, this policy has been easily achieved, indicating perhaps this floor requirement should be elevated in the future. However, the standing Policy Goal of the City Council is to establish and retain an undesignated reserve of 50% the annual General Fund operating budget. At June 30, 2022, the total unassigned General Fund reserve balance is $6,068,266 or .97 times the size of the adopted General Fund operating budget for the fiscal year ending June 30, 2022. This means in an emergency scenario, the City could operate over an entire year on reserves alone.
The City of Clayton maintains a five-year Capital Improvement Program (CIP), which serves as its planning document to ensure its infrastructure is well maintained. The City prioritizes roads for maintenance and reconstruction based on the relative pavement condition index, with other infrastructure and facility improvement projects prioritized at the discretion of the City Council. Over the course of the last 10 years the City has invested approximately $1.0 million into facility and infrastructure capital improvements, funded by Highway User Tax Apportionments (i.e. HUTA or “gas taxes”), local Measure J taxes, redevelopment property tax increment allocations (prior to the dissolution of the Clayton Redevelopment Agency in 2012), and other state and federal grants. For the upcoming fiscal year ending June 30, 2023, the City’s CIP is expected to invest an additional $1,362,697 into transportation and general infrastructure maintenance and improvement needs of the community.
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Comprehensive Annual Financial Report
For the year ended June 30, 2022
Letter of Transmittal
Acknowledgements
The preparation of an ACFR cannot be accomplished without the professional, efficient and dedicated services of the Admin/Finance/Legal Department staff (in particular, Accounting Technician Jennifer Giantvalley), and the independent accounting firm of Cropper Rowe, LLP. We also thank the honorable members of the City Council and the various departments for their cooperation and support in planning and conducting the financial operations of the City during the fiscal year.
Respectfully Submitted,
Reina J. Schwartz Nitish Sharma
City Manager Finance Director (Interim)
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OUR MISSION
To be of exemplary service to the Clayton community with an emphasis on:
OUR VALUES
Courtesy Inclusiveness
Creativity Informed risk taking
Diversity Open communication
Employee participation Professionalism
Ethical behavior Trustworthiness
Fiscal responsibility
OUR VISION
The City of Clayton organization will be recognized as a premier small city. Customer service will be our hallmark; organizational processes will be a model of efficiency and effectiveness; innovation will be common place; and excellence of work product will be the norm. The employees will enjoy their work environment, and each will be a valued and respected member in his or her field of work. All residents and the City Council will be proud of their City government.
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Finance Director
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DIRECTORY OF PRINCIPAL OFFICIALS AND ADVISORY BODIES
As of report issuance
CITY COUNCIL
Jeff Wan, Mayor
Jim Diaz, Vice Mayor
Peter Cloven, Councilmember
Holly Tillman, Councilmember
Kim Trupiano, Councilmember
COMMISSIONS
Planning Commission
COMMITTEES
Trails and Landscaping Committee
APPOINTED OFFICIALS AND DEPARTMENT HEADS
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Reina Schwartz |
City Manager |
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Hank Stratford |
City Treasurer |
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Nitish Sharma |
Finance Director (Interim) |
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Richard McEachin |
Chief of Police |
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Janet Calderon |
City Clerk / HR Manager |
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Dana Ayers |
Community Development Director |
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Jim Warburton |
Maintenance Supervisor |
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Malathy Subramanian |
City Attorney (contract) |
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Larry Theis |
City Engineer (contract) |
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FINANCE TEAM |
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Jennifer Giantvalley |
Accounting Technician |
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Richard Sanders |
Accountant (consultant) |
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Regional Map of Clayton, California
And Nearby Cities
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FINANCIAL SECTION
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INDEPENDENT AUDITORS’
REPORT
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INDEPENDENT AUDITOR’S REPORT
To the City Council
City of Clayton, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Clayton, Clayton, as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the City of Clayton’s basic financial statements as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Clayton, as of June 30, 2022, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards , issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City of Clayton and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Clayton’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
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from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards , we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City of Clayton’s internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Clayton’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, pension plan funding status, other postemployment benefits plan funding status, and budgetary comparison information on pages 21-31 and 103-111 be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Clayton’s basic financial statements. The accompanying combining and individual nonmajor fund financial statements are presented for purposes of additional analysis and
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MANAGEMENT’S DISCUSSION AND ANALYSIS
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Management of the City of Clayton (the "City") provides this Management’s Discussion and Analysis of the City's Basic Financial Statements for readers of the City's financial statements. This narrative overview and analysis of the financial activities of the City is for its fiscal year ended June 30, 2022. We encourage readers to consider this information in conjunction with the additional information that is furnished with the City's financial statements, which follow.
FINANCIAL HIGHLIGHTS - PRIMARY GOVERNMENT Government -Wide Highlights
Net Position - The assets of the City of Clayton exceeded its liabilities at the close of the year ended June 30, 2022, by $45,759,874. Of this amount, $5,744,418 was reported as "unrestricted net position" and may be used to meet the ongoing obligations to citizens and creditors.
Changes in Net Position - The City's total net position increased by $337,870 in the fiscal year ending June 30, 2022. Net position of governmental activities increased by $381,717, while net position of business-type activities decreased by $43,847.
Major Fund Highlights
Governmental Funds – As of the year ended June 30, 2022, the City's governmental funds reported a combined ending fund balance of $17,172,907. Of this amount $5,744,867 represents "unassigned fund balances" available for appropriation.
General Fund - The unassigned fund balance of the General Fund on June 30, 2022 was $5,744,867, while the non-spendable and committed fund balances were $173,471 and $495,019 respectively.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City of Clayton's basic financial statements. The City of Clayton's basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements and 3) notes to the financial statements. This report also contains required supplementary information and supplemental information in addition to the basic financial statements themselves.
Government-wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview of the City of Clayton's finances, in a manner similar to a private-sector business.
The statement of net position presents information on all of the City of Clayton's assets and liabilities, with the difference between the two reported as net position . Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City of Clayton is improving or deteriorating.
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OVERVIEW OF THE FINANCIAL STATEMENTS, Continued Government-wide Financial Statements, Continued
The statement of activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows . Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e. g. uncollected taxes and earned but unused vacation leave).
Both of the government-wide financial statements distinguish functions of the City of Clayton that are principally supported by taxes and intergovernmental revenues ( governmental activities ) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges ( business-type activities ). The governmental activities of the City of Clayton include general government, public safety, public works, community and economic development, and parks and recreation services. The business-type activities of the City of Clayton include the activities of the Endeavor Hall enterprise fund.
Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Clayton, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City of Clayton can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.
Governmental Funds
Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources , as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government- wide financial statements. By doing so, readers may better understand the long- term impact of the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities .
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OVERVIEW OF THE FINANCIAL STATEMENTS, Continued Fund Financial Statements, Continued
The City of Clayton maintains fifteen individual governmental funds. Information is presented separately in the government funds balance sheet and governmental funds statement of revenues, expenditures, and changes in fund balances for the General Fund, Landscape Maintenance District, Housing Successor Agency, and Capital Improvement Program, all of which are reported as major funds.
Proprietary Funds
The City of Clayton maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government- wide financial statements. The City of Clayton uses an enterprise fund to account for its Endeavor Hall activities. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City of Clayton various functions. City of Clayton uses three internal service funds to account for its capital equipment replacement program, self-insurance activities, and extraordinary employer pension contribution fluctuations. Because these services predominantly benefit governmental rather that business-type functions, they have been included within governmental activities in the government-wide financial statements.
Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The City’s sole enterprise fund is considered to be a major fund. The internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements.
Fiduciary Funds
The City is the fiscal agent for benefit assessment districts and other parties holding amounts collected which await payment as directed. The City’s fiduciary activities are reported in the separate statement of fiduciary net position and the agency funds statement of assets and liabilities. These activities are excluded from the City’s other financial statements because the City is acting as a trustee for these funds and cannot use these assets to finance its own operations. The City’s fiduciary funds include a private-purpose trust fund to account for the activities of the City of Clayton Redevelopment Successor Agency.
Notes to the Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. The notes to the financial statements can be found on pages 55-101 of this report.
23
OVERVIEW OF THE FINANCIAL STATEMENTS, Continued Other Information
In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City’s progress in funding its obligation to provide pension and other post -employment benefits to its employees as well as budgetary information for the General Fund and each of the major governmental funds.
FINANCIAL ANALYSIS GOVERNMENT-WIDE STATEMENTS Analysis of Overall Net Position and Results of Operations
As noted previously, net position may serve over time as a useful indicator of a government's financial position. The City’s total net position was $45,759,874 at June 30, 2022, which is an increase of $392,782 from the prior year’s restated net position at June 30, 2021.
The largest portion of the City’s net position reflects its investment in capital assets (e. g. land, buildings, etc. ) net of any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens and these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The following is condensed comparative Statements of Net Position for the fiscal years ended June 30, 2022 and June 30, 2021:
|
Business- |
Business- |
|||||||||||||||||
|
Governmental |
Governmental |
Type |
Type |
|||||||||||||||
|
Activities |
Activities |
Activities |
Activities |
Total |
Total |
|||||||||||||
|
Assets |
2022 |
2021 |
2022 |
2021 |
2022 |
2021 |
||||||||||||
|
Current Assets |
$ |
14,773,722 |
$ |
14,812,813 |
$ |
(120,893) |
$ |
(112,174) |
$ |
14,652,829 |
$ |
14,700,639 |
||||||
|
Noncurrent Assets |
6,482,003 |
6,462,021 |
- |
- |
6,482,003 |
6,462,021 |
||||||||||||
|
Capital Assets |
29,116,205 |
28,793,685 |
1,009,203 |
1,038,076 |
30,125,408 |
29,831,761 |
||||||||||||
|
Total Assets |
||||||||||||||||||
|
50,371,930 |
50,068,519 |
888,310 |
925,902 |
51,260,240 |
50,994,421 |
|||||||||||||
|
Deferred outflows |
1,285,641 |
1,051,589 |
- |
- |
1,285,641 |
1,051,589 |
||||||||||||
|
Liabilities |
||||||||||||||||||
|
Current Liabilities |
640,113 |
362,937 |
8,171 |
1,916 |
648,284 |
364,853 |
||||||||||||
|
Noncurrent Liabilities |
3,666,339 |
5,944,104 |
- |
- |
3,666,339 |
5,944,104 |
||||||||||||
|
Total Liabilities |
||||||||||||||||||
|
4,306,452 |
6,307,041 |
8,171 |
1,916 |
4,314,623 |
6,308,957 |
|||||||||||||
|
Deferred inflows |
2,471,384 |
369,961 |
- |
- |
2,471,384 |
369,961 |
||||||||||||
|
Net Position |
||||||||||||||||||
|
Net investment in |
||||||||||||||||||
|
capital assets |
29,116,205 |
28,793,685 |
1,009,203 |
1,038,076 |
30,125,408 |
29,831,761 |
||||||||||||
|
Restricted |
9,890,048 |
13,156,670 |
- |
- |
9,890,048 |
13,156,670 |
||||||||||||
|
Unrestricted |
5,873,482 |
2,492,751 |
(129,064) |
(114,090) |
5,744,418 |
2,378,661 |
||||||||||||
|
Total net position |
||||||||||||||||||
|
$ |
44,879,735 |
$ |
44,443,106 |
$ |
880,139 |
$ |
923,986 |
$ |
45,759,874 |
$ |
45,367,092 |
|||||||
24
FINANCIAL ANALYSIS GOVERNMENT-WIDE STATEMENTS, Continued Analysis of Overall Net Position and Results of Operations, Continued
Of the City’s total net position, $9,890,048 (21.6%) represents resources that are subject to external restrictions on how they may be used. The balance of the unrestricted net position of $5,744,418 (12.6%) may be used to meet the City's ongoing obligations to citizens and creditors. City revenues for the year, including both governmental and business-type activities, were $9,359,704, while expenses totaled $9,021,834, resulting in a net increase in net position of $337,870 excluding transfers, extraordinary and special items. This net increase was primarily attributable to a increase in net position of governmental activities, which is discussed in greater detail in the following section.
The following is a recap of the City’s Statement of Activities and Changes in Net Position for the fiscal years ended June 30, 2022 and June 30, 2021:
|
Business- |
Business- |
||||||||||||||||||
|
Governmental |
Governmental |
Type |
Type |
||||||||||||||||
|
Activities |
Activities |
Activities |
Activities |
Total |
Total |
||||||||||||||
|
Revenues: |
2022 |
2021 |
2022 |
2021 |
2022 |
2021 |
|||||||||||||
|
Program revenues: |
|||||||||||||||||||
|
Charges for Services |
$ |
1,002,338 |
$ |
961,910 |
$ |
16,847 |
$ |
(1,442) |
$ |
1,019,185 |
$ |
960,468 |
|||||||
|
Operating grants and contributions |
2,755,382 |
893,718 |
- |
- |
2,755,382 |
893,718 |
|||||||||||||
|
Capital grants and contributions |
120,774 |
42,363 |
- |
- |
120,774 |
42,363 |
|||||||||||||
|
Total program revenues |
|||||||||||||||||||
|
3,878,494 |
1,897,991 |
16,847 |
(1,442) |
3,895,341 |
1,896,549 |
||||||||||||||
|
General revenues: |
|||||||||||||||||||
|
Property taxes |
2,846,766 |
2,722,906 |
- |
- |
2,846,766 |
2,722,906 |
|||||||||||||
|
Special parcel taxes |
1,348,657 |
1,309,373 |
- |
- |
1,348,657 |
1,309,373 |
|||||||||||||
|
Sales and use taxes |
563,908 |
510,029 |
- |
- |
563,908 |
510,029 |
|||||||||||||
|
Business license taxes |
162,881 |
90,872 |
- |
- |
162,881 |
90,872 |
|||||||||||||
|
Franchise fees |
587,740 |
567,350 |
- |
- |
587,740 |
567,350 |
|||||||||||||
|
Payments in lieu of taxes |
174,443 |
171,029 |
- |
- |
174,443 |
171,029 |
|||||||||||||
|
Investment income |
(281,502) |
508,256 |
(379) |
(281,502) |
507,877 |
||||||||||||||
|
Miscellaneous |
54,512 |
38,972 |
- |
- |
54,512 |
38,972 |
|||||||||||||
|
Gain (loss) on sale of assets |
6,958 |
1,741 |
- |
- |
6,958 |
1,741 |
|||||||||||||
|
Total general revenues |
|||||||||||||||||||
|
5,464,363 |
5,920,528 |
(379) |
5,464,363 |
5,920,149 |
|||||||||||||||
|
Total revenues |
|||||||||||||||||||
|
9,342,857 |
7,818,519 |
16,847 |
(1,821) |
9,359,704 |
7,816,698 |
||||||||||||||
|
Expenses: |
|||||||||||||||||||
|
General government |
2,629,048 |
1,796,454 |
- |
- |
2,629,048 |
1,796,454 |
|||||||||||||
|
Public works |
2,509,096 |
2,909,710 |
- |
- |
2,509,096 |
2,909,710 |
|||||||||||||
|
Public safety |
2,736,817 |
2,980,000 |
- |
- |
2,736,817 |
2,980,000 |
|||||||||||||
|
Community and economic |
|||||||||||||||||||
|
development |
356,450 |
357,133 |
- |
- |
356,450 |
357,133 |
|||||||||||||
|
Parks and recreation services |
729,729 |
592,433 |
- |
- |
729,729 |
592,433 |
|||||||||||||
|
Endeavor Hall |
- |
- |
60,694 |
73,117 |
60,694 |
73,117 |
|||||||||||||
|
Total expenses |
|||||||||||||||||||
|
8,961,140 |
8,635,730 |
60,694 |
73,117 |
9,021,834 |
8,708,847 |
||||||||||||||
|
Change in Net Position |
381,717 |
(817,211) |
(43,847) |
(74,938) |
337,870 |
(892,149) |
|||||||||||||
|
Net Position – Beginning, restated |
|||||||||||||||||||
|
44,498,018 |
45,260,317 |
923,986 |
998,924 |
45,422,004 |
46,259,241 |
||||||||||||||
|
Net Position – ending |
|||||||||||||||||||
|
$ |
44,879,735 |
$ |
44,443,106 |
$ |
880,139 |
$ |
923,986 |
$ |
45,759,874 |
$ |
45,367,092 |
||||||||
25
FINANCIAL ANALYSIS GOVERNMENT-WIDE STATEMENTS, Continued Analysis of Governmental Activities
The increase in net position of the governmental activities over the prior year was primarily attributable to a increase in both operating and capital grants and contributions. Total expenses were $8,961,140 in the current year compared to $8,635,730 in the prior year. The following chart depicts the relative size of expenses by function for the fiscal years ending June 30, 2022 and 2021:
Government Activities
Expenses by Function
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
-
General
Government
Public Safety
Public Works Community Parks and
and Economic Recreation
Development Services
Fiscal Year 2021
Fiscal Year 2022
Total program revenues from governmental activities were $ 3,878,494 in the current year compared to $1,897,991 in the prior year. Program revenues are derived directly from the program itself or from parties outside the reporting government's taxpayers or citizenry. They reduce the net cost of the function to be financed from government's general revenues. Of the governmental program revenues, 25.8% were derived from charges for services, which includes park use fees, rental fees, licenses and permits, planning services fees, engineering plan check fees, police service fees, and other revenues. The remaining 74.2% of the governmental program revenues came from operating and capital grants and contributions. General revenues are all other revenues not categorized as program revenues such as property taxes, special parcel taxes, sales and use taxes, motor vehicle fees, investment earnings, franchise fees, use of money and property, service charges, and miscellaneous revenues.
26
F INANCIAL ANALYSIS GOVERNMENT-WIDE STATEMENTS, Continued Analysis of Governmental Activities, Continued
Total general revenues from governmental activities decreased by $456,165 (7.7%) over the prior year. The following pie charts depict the relative size of governmental activities program and general revenues by source for the fiscal years ending June 30, 2022 and 2021:
|
Governmental Activities |
|
|
Revenues by Source |
|
|
$6,000,000 |
|
|
$5,000,000 |
|
|
$4,000,000 |
|
|
$3,000,000 |
|
|
$2,000,000 |
|
|
$1,000,000 |
|
|
$- |
|
|
$(1,000,000) |
|
|
Fiscal Year 2021 |
Fiscal Year 2022 |
Analysis of Business-Type Activities
Total business-type expenses decreased 20.4% from $73,117 in the prior year to $60,694 in the current year. This decrease is largely attributable to the decrease in general and administrative costs of the Endeavor Hall rental facility. Total services revenue increased significantly from $-1,442 in the prior year to $16,847 in the current year due to the increase in rental activity. Net position of business -type activities declined $43,847 to a total of $ 880,139 at June 30, 2022 due to charges for services being insufficient to cover the annual depreciation expense and general operating expenses of underlying Endeavor Hall rental facility assets.
27
FINANCIAL ANALYSIS OF INDIVIDUAL FUND STATEMENTS Analysis of Governmental Funds
The focus of the City of Clayton's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of Clayton's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year.
As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $17,172,907. Of this amount, $5,744,867 (33.5%) is unassigned; $173,471(1.0%) is in non-spendable form; $3,330,153 (19.4%) is assigned for specific purposes; $6,719,595 (39.1%) is restricted by law, regulation, or other outside contractual agreements; and $1,204,821 (7.0%) is committed for specific expenditures in the future.
General Fund
The City’s General Fund reported an increase in fund balance of $249,464 (4.0%) in the current fiscal year. This modest increase is mostly attributable to increase in property taxes, special parcel taxes and assessments, and a corresponding decrease in investment earnings (primarily due to market rate adjustments). Total fund balance of the General Fund is $6,413,357 as of June 30, 2022, of which $5,744,867 (89.6%) is reported as unassigned and available for appropriation. This unassigned fund balance is .92 times the size of the General Fund’s adopted operating budget for the upcoming fiscal year ending June 30, 2022.
Below is a summary of the General Fund expenditures by department.
|
Pandemic |
|||||||||||||
|
Rainy |
Recovery |
||||||||||||
|
General government |
General Fund |
Day Fund |
Reserve |
Total |
|||||||||
|
$ |
1,447,700 |
$ |
26,000 |
$ |
1,096,717 |
$ |
2,570,417 |
||||||
|
Public safety |
2,684,319 |
- |
- |
2,684,319 |
|||||||||
|
Public works |
333,423 |
- |
- |
333,423 |
|||||||||
|
Community and |
|||||||||||||
|
economic development |
299,175 |
- |
- |
299,175 |
|||||||||
|
Parks and recreation |
|||||||||||||
|
services |
336,592 |
- |
- |
336,592 |
|||||||||
|
Capital outlay |
22,168 |
- |
- |
22,168 |
|||||||||
|
Total expenditures |
$ |
5,123,377 |
$ |
26,000 |
$ |
1,096,717 |
$ |
6,246,094 |
|||||
Landscape Maintenance District
Community Facilities District No. 2007-1, referred to as the Landscape Maintenance District special revenue fund, reported a decrease in fund balance of $447,353 (41.2%) in the current fiscal year. This decrease in fund balance is largely attributable to increases in operating costs such as water service and weed abatement, as well as a increase in project costs/capital outlay costs. Total fund balance of the Landscape Maintenance District is $ 638,533 as of June 30, 2022, of which $ 32,509 is reported as assigned or restricted for the following year’s operating budget, and the remaining fund balance is assigned.
28
FINANCIAL ANALYSIS OF INDIVIDUAL FUND STATEMENTS, Continued Analysis of Governmental Funds, Continued
Successor Housing Agency
The Successor Housing Agency special revenue fund reported a increase in fund balance of $187,452 (3.4%) in the current fiscal year. This increase in fund balance resulted primarily from unspent program revenue on housing loan repayments as well as unrealized gains on the inventory of affordable income housing. Total fund balance of the Successor Housing Agency is $5,617,695 as of June 30, 2022, which is classified entirely as restricted.
Capital Improvement Program
The Capital Improvement Program capital projects fund reported an increase in fund balance of $681,698 (35.4%) in the current fiscal year. This increase in fund balance primarily arose from timing differences between project execution and funding. Total fund balance of the Capital Improvement Program fund is $2,606,444 and is reported entirely as assigned for capital projects as of June 30, 2022.
Analysis of Proprietary Funds
The City of Clayton's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The net position of the City’s only major enterprise fund, Endeavor Hall, at the end of the year was $880,139, and total net position for the internal service funds amounted to $1,000,736.
GENERAL FUND BUDGETARY HIGHLIGHTS
General Fund actual revenues and transfers fall short of total revenues and transfers of the final and adopted budget by $39,744. The variance is due to a combination of factors including an increase in taxes and assessment and a decrease in the investment reported at year-end based on the market rate. The unrealized investment loss was reported as a direct result of the City’s investment portfolio being largely made up of fixed instrument securities during a time of declining interest rates. As noted in recent quarterly investment portfolio reports presented to the City Council, the City’s investment policy is designed to reduce volatility and generate consistent returns in the long run-in order to protect public funds. Actual property tax revenues exceeded somewhat conservative adopted budgetary growth projections by $186,163 (6.9%), which was largely offset by lower-than-expected revenue from permits, licenses and fees and sales tax receipts.
29
GENERAL FUND BUDGETARY HIGHLIGHTS, Continued
Actual General Fund expenditures of $6,246,094 were more than the final adjusted budget by $1,447,307 for the year ended June 30, 2022. The negative variance is a result of actual expenditures being more than budgeted in General government due to investments in the capital expenditures for the fiscal year ended June 30, 2022.
CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets
The City’s investment in capital assets for its governmental and business-type activities as of June 30, 2022 amounted to $30,125,408 (net of accumulated depreciation). This investment in capital assets includes land, building, improvements, machinery and equipment, park facilities, corporate yard building, and roads. Total depreciation expense on governmental assets totaled $1,048,171, versus $1,080,713 in the prior year. The slight decrease in depreciation is attributable to the completion of significant capital projects during the prior and current fiscal years and capital assets reaching their estimated useful lives. Additional information on the City of Clayton's capital assets can be found in Note 6 of this report.
Debt Administration
The remaining debt of the former Clayton Redevelopment Agency (RDA) of $ 5,835,000 was transferred to the Successor Agency on February 1, 2012 (fiscal year ending June 30, 2012) . The City has no outstanding general obligation debt. The Successor Agency has maintained its "AAA" credit rating (S&P) on outstanding Tax Allocation Bonds. Additional information on the Successor Agency's long-term debt can be found in Note 13 of this report.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET
As the City of Clayton is largely a residential community the annual General Fund operating budget relies heavily on property taxes to finance annual operating appropriations rather than other sources of revenue larger and more commercially and industrial developed municipalities have access to (i. e. sales and transient occupancy taxes). The City strives to meet the ever evolving needs of local residents and businesses within the constraints of limited and sometimes restrictive revenue sources.
There was an increase in adopted General Fund operating appropriations when compared to the actuals reported as of June 30, 2022, for the upcoming fiscal year ending June 30, 2023 of $641,365 (10.2%) . The increase in appropriations is attributable primarily to labor wage and benefit costs of various City departments and capital improvement costs included as part of the general government. The annual June 2021 to June 2022 consumer price index inflationary factor is 6.8% as published by the U. S. Bureau of Labor and Statistics for the San Francisco-Oakland-Hayward region. In addition, there are projected decreases in the annual CalPERS unfunded accrued liabilities and normal costs, primarily due to Classic Tier employees retiring and new employees being hired in the PEPRA tier. The adopted budget for the fiscal year ending June 30, 2023 projects total General Fund revenues of $6,887,459 an increase of approximately
30
Management’s Discussion and Analysis
For the year ended June 30, 2022
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET, Continued
$34,920 over the prior year actual. The projected revenue growth reflects continued growth in property tax and sales and use taxes supported by actual results reported in the fiscal year ending June 30, 2022.
REQUEST FOR INFORMATION
This financial report is designed to provide a general overview of the City of Clayton's finances for all those with an interest in the City's finances. Questions concerning any of the information provided in this report, or requests for additional financial information, should be addressed to the Office of the Finance Manager, 6000 Heritage Trail, Clayton, California 94517.
31
GOVERNMENT-WIDE
FINANCIAL STATEMENTS
32
Government-Wide
Statement of Net Position
June 30, 2022
|
Governmental |
Business-Type |
|||||||
|
ASSETS |
Activities |
Activites |
Total |
|||||
|
Current Assets: |
||||||||
|
Cash and investments |
$ |
13,441,679 |
$ |
- |
$ |
13,441,679 |
||
|
Accounts receivable (net of allowances) |
1,133,315 |
- |
1,133,315 |
|||||
|
Interest receivable |
25,257 |
- |
25,257 |
|||||
|
Internal balances |
120,893 |
(120,893) |
- |
|||||
|
Prepaid expenses |
52,578 |
- |
52,578 |
|||||
|
Total Current Assets |
14,773,722 |
(120,893) |
14,652,829 |
|||||
|
Noncurrent Assets: |
||||||||
|
Investment in affordable housing |
3,170,453 |
- |
3,170,453 |
|||||
|
Notes receivable |
3,311,550 |
- |
3,311,550 |
|||||
|
Nondepreciable assets |
3,133,754 |
167,738 |
3,301,492 |
|||||
|
Depreciable assets, net |
25,982,451 |
841,465 |
26,823,916 |
|||||
|
Total Noncurrent Assets |
35,598,208 |
1,009,203 |
36,607,411 |
|||||
|
Total Assets |
50,371,930 |
888,310 |
51,260,240 |
|||||
|
DEFERRED OUTFLOWS OF RESOURCES |
||||||||
|
Deferred outflows related to pension |
1,285,641 |
- |
1,285,641 |
|||||
|
Deferred outflows related to OPEB |
- |
- |
- |
|||||
|
Total Deferred Outflows of Resources |
1,285,641 |
- |
1,285,641 |
|||||
|
LIABILITIES |
||||||||
|
Current Liabilites: |
||||||||
|
Accounts payable |
149,907 |
2,671 |
152,578 |
|||||
|
Deposits payable |
- |
5,500 |
5,500 |
|||||
|
Accrued payroll |
37 |
- |
37 |
|||||
|
Unearned revenue |
332,166 |
- |
332,166 |
|||||
|
Compensated absences payable |
83,645 |
- |
83,645 |
|||||
|
Other liabilities |
74,358 |
- |
74,358 |
|||||
|
Total Current Liabilities |
640,113 |
8,171 |
648,284 |
|||||
|
Noncurrent Liabilites: |
||||||||
|
Compensated absences payable |
83,645 |
- |
83,645 |
|||||
|
Net OPEB liability |
578,315 |
- |
578,315 |
|||||
|
Net pension liability |
2,759,739 |
- |
2,759,739 |
|||||
|
Lease payable |
244,640 |
- |
244,640 |
|||||
|
Total Noncurrent Liabilities |
3,666,339 |
- |
3,666,339 |
|||||
|
Total Liabilities |
4,306,452 |
8,171 |
4,314,623 |
|||||
|
DEFERRED INFLOWS OF RESOURCES |
||||||||
|
Deferred inflows related to pension |
2,471,384 |
- |
2,471,384 |
|||||
|
Deferred inflows related to OPEB |
- |
- |
- |
|||||
|
Total Deferred Inflows of Resources |
2,471,384 |
- |
2,471,384 |
|||||
|
NET POSITION |
||||||||
|
Net investment in capital assets |
29,116,205 |
1,009,203 |
30,125,408 |
|||||
|
Restricted for special projects and programs |
9,890,048 |
- |
9,890,048 |
|||||
|
Unrestricted |
5,873,482 |
(129,064) |
5,744,418 |
|||||
|
Total Net Position |
$ |
44,879,735 |
$ |
880,139 |
$ |
45,759,874 |
||
The accompanying notes are an integral part of the financial statements
33
Government-Wide
Statement of Activities and Changes in Net Position
For the year ended June 30, 2022
|
Operating |
Capital |
||||||||||||||||||||
|
Charges |
Grants and |
Grants and |
Governmental Business-type |
||||||||||||||||||
|
Functions/Programs |
Expenses |
for Services |
Contributions |
Contributions |
Activities |
Activities |
Total |
||||||||||||||
|
Primary Government: |
|||||||||||||||||||||
|
Governmental Activities |
|||||||||||||||||||||
|
General government |
$ |
2,629,048 |
$ |
437,626 |
$ |
13,808 |
$ |
- |
$ |
(2,177,614) |
$ |
- |
$ |
(2,177,614) |
|||||||
|
Public safety |
2,736,817 |
48,292 |
397,461 |
- |
(2,291,064) |
- |
(2,291,064) |
||||||||||||||
|
Public works |
2,509,096 |
331,218 |
2,344,113 |
44,634 |
210,869 |
- |
210,869 |
||||||||||||||
|
Community and economic development |
356,450 |
142,299 |
- |
76,140 |
(138,011) |
- |
(138,011) |
||||||||||||||
|
Parks and recreation services |
729,729 |
42,903 |
- |
- |
(686,826) |
- |
(686,826) |
||||||||||||||
|
Total Governmental Activities |
8,961,140 |
1,002,338 |
2,755,382 |
120,774 |
(5,082,646) |
- |
(5,082,646) |
||||||||||||||
|
Business-Type Activities |
(43,847) |
(43,847) |
|||||||||||||||||||
|
Endeavor Hall |
60,694 |
16,847 |
- |
- |
- |
||||||||||||||||
|
Total Business-Type Activities |
60,694 |
16,847 |
- |
- |
- |
(43,847) |
(43,847) |
||||||||||||||
|
Total Primary Government |
$ |
9,021,834 |
$ |
1,019,185 |
$ |
2,755,382 |
$ |
120,774 |
(5,082,646) |
(43,847) |
(5,126,493) |
||||||||||
|
General revenues: |
|||||||||||||||||||||
|
Taxes: |
|||||||||||||||||||||
|
Property taxes |
2,846,766 |
- |
2,846,766 |
||||||||||||||||||
|
Special parcel taxes |
1,348,657 |
- |
1,348,657 |
||||||||||||||||||
|
Sales and use taxes |
563,908 |
- |
563,908 |
||||||||||||||||||
|
Business license taxes |
162,881 |
- |
162,881 |
||||||||||||||||||
|
Total Taxes |
4,922,212 |
- |
4,922,212 |
||||||||||||||||||
|
Franchise fees |
587,740 |
- |
587,740 |
||||||||||||||||||
|
Payments in lieu of taxes |
174,443 |
- |
174,443 |
||||||||||||||||||
|
Investment income (loss) |
(281,502) |
- |
(281,502) |
||||||||||||||||||
|
Other miscellaneous general revenues |
54,512 |
- |
54,512 |
||||||||||||||||||
|
Gain (loss) on disposal of fixed assets |
6,958 |
- |
6,958 |
||||||||||||||||||
|
Total general revenues and transfers |
5,464,363 |
- |
5,464,363 |
||||||||||||||||||
|
Change in net position |
381,717 |
(43,847) |
337,870 |
||||||||||||||||||
|
Net position - beginning, as restated |
44,498,018 |
923,986 |
45,422,004 |
||||||||||||||||||
|
Net position - ending |
$ |
44,879,735 |
$ |
880,139 |
$ |
45,759,874 |
|||||||||||||||
The accompanying notes are an integral part of the financial statements
34
This page intentionally left blank
35
FUND FINANCIAL STATEMENTS
36
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37
GOVERNMENTAL FUNDS
Governmental Funds are used to account for activities primarily supported by taxes, grants, and similar revenue sources. All governmental funds can be classified into one of five fund types: the General Fund, special revenue funds, debt service funds, capital projects funds, and permanent funds.
General Fund:
The General Fund is the main operating fund of the City and is presented as a major fund. It is used to account for all financial resources except those required to be accounted for in another fund.
Special Revenue Funds:
Special revenue funds account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. The following are reported as major special revenue funds:
Landscape Maintenance District - Community Facilities District (CFD) No. 2007-1, referred to as the Landscape Maintenance District special revenue fund, accounts for real property voter-approved special parcel taxes collected to maintain arterial landscaping and open space within the City (CFD No. 2007-1 sunsets in 2027).
Successor Housing Agency - Accounts for the activities related to the assets assumed by the City of Clayton as the Housing Successor to the housing activities of the former Redevelopment Agency of the City of Clayton.
American Rescue Plan Act – Accounts for the activities related to the grant funding received from the American Rescue Plan Act.
Capital Projects Funds:
Capital projects funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities other than those financed by proprietary funds. The following is the City’s sole major capital projects fund:
Capital Improvement Program - Accounts for the projects identified in the capital improvement program funded by various federal and state grants as well as through transfers from the General Fund.
Non-major Governmental Funds:
All non-major governmental funds of the City are aggregated and presented on the face of the basic financial statements in one column.
38
Governmental Funds
Balance Sheet
June 30, 2022
|
Special Revenue |
||||||||
|
Landscape |
||||||||
|
Maintenance |
Successor |
|||||||
|
General Fund |
District |
Housing Agency |
||||||
|
ASSETS |
||||||||
|
Cash and investments |
$ |
5,985,880 |
$ |
693,391 |
$ |
1,857,892 |
||
|
Accounts receivable |
646,294 |
- |
- |
|||||
|
Interest receivable |
25,257 |
- |
- |
|||||
|
Investment in affordable housing |
- |
- |
3,170,453 |
|||||
|
Notes receivable |
- |
- |
3,311,550 |
|||||
|
Prepaid items |
52,578 |
- |
- |
|||||
|
Due from other funds |
120,893 |
- |
- |
|||||
|
Advance to other funds |
- |
- |
- |
|||||
|
Total Assets |
$ |
693,391 |
||||||
|
$ |
6,830,902 |
$ |
8,339,895 |
|||||
|
LIABILITIES, DEFERRED INFLOWS OF |
||||||||
|
RESOURCES AND FUND BALANCES |
||||||||
|
Liabilities: |
||||||||
|
Accounts payable |
$ |
1,826 |
$ |
54,858 |
$ |
- |
||
|
Other payables |
71,658 |
- |
- |
|||||
|
Accrued payroll |
37 |
- |
- |
|||||
|
Compensated absences |
83,645 |
- |
- |
|||||
|
Unearned revenue |
- |
- |
- |
|||||
|
Total Liabilities |
157,166 |
54,858 |
- |
|||||
|
Deferred Inflows of Resources: |
||||||||
|
Deferred revenue |
260,379 |
- |
2,722,200 |
|||||
|
Total Deferred Inflows of Resources |
- |
|||||||
|
260,379 |
2,722,200 |
|||||||
|
Fund Balance: |
||||||||
|
Non-spendable |
173,471 |
- |
- |
|||||
|
Restricted |
- |
32,509 |
5,617,695 |
|||||
|
Committed |
495,019 |
- |
- |
|||||
|
Assigned |
- |
606,024 |
- |
|||||
|
Unassigned |
5,744,867 |
- |
- |
|||||
|
Total Fund Balance |
638,533 |
|||||||
|
6,413,357 |
5,617,695 |
|||||||
|
Total Liabilities, Deferred Inflows |
$ |
6,830,902 |
$ |
693,391 |
$ |
8,339,895 |
||
|
of Resources and Fund Balances |
||||||||
The accompanying notes are an integral part of the financial statements
39
|
City of Clayton |
||||||||||||
|
Governmental Funds |
||||||||||||
|
Balance Sheet |
||||||||||||
|
June 30, 2022 |
||||||||||||
|
Capital Project |
||||||||||||
|
Capital |
Other |
|||||||||||
|
American |
Improvement |
Governmental |
||||||||||
|
Rescue Plan Act |
Program |
Funds |
Total |
|||||||||
|
$ |
- |
$ |
2,674,360 |
$ |
1,769,715 |
$ |
12,981,238 |
|||||
|
- |
- |
487,021 |
1,133,315 |
|||||||||
|
- |
- |
- |
25,257 |
|||||||||
|
- |
- |
- |
3,170,453 |
|||||||||
|
- |
- |
- |
3,311,550 |
|||||||||
|
- |
- |
- |
52,578 |
|||||||||
|
- |
- |
- |
120,893 |
|||||||||
|
- |
- |
- |
- |
|||||||||
|
$ |
- |
$ |
2,674,360 |
$ |
2,256,736 |
$ |
20,795,284 |
|||||
|
$ |
- |
$ |
67,916 |
$ |
24,992 |
$ |
149,592 |
|||||
|
- |
- |
2,700 |
74,358 |
|||||||||
|
- |
- |
- |
37 |
|||||||||
|
- |
- |
- |
83,645 |
|||||||||
|
- |
- |
332,166 |
332,166 |
|||||||||
|
- |
67,916 |
359,858 |
639,798 |
|||||||||
|
- |
- |
- |
2,982,579 |
|||||||||
|
- |
- |
- |
2,982,579 |
|||||||||
|
- |
- |
- |
173,471 |
|||||||||
|
- |
- |
1,069,391 |
6,719,595 |
|||||||||
|
- |
- |
709,802 |
1,204,821 |
|||||||||
|
- |
2,606,444 |
117,685 |
3,330,153 |
|||||||||
|
- |
- |
- |
5,744,867 |
|||||||||
|
- |
2,606,444 |
1,896,878 |
17,172,907 |
|||||||||
|
$ |
- |
$ |
2,674,360 |
$ |
2,256,736 |
$ |
20,795,284 |
|||||
The accompanying notes are an integral part of the financial statements
40
This page intentionally left blank
41
Reconciliation of Governmental Funds Balance Sheet to the
Statement of Net Position
June 30, 2022
|
Total Fund Balances - Governmental Funds |
$ |
17,172,907 |
|
Amounts reported for governmental activities in the Statement of Net Position are different because: |
||
|
CAPITAL ASSETS |
||
|
Capital assets used in governmental activities are not current financial resources and therefore are |
||
|
not reported in the Governmental Funds Balance Sheet. |
||
|
Non-depreciable capital assets |
3,133,754 |
|
|
Depreciable capital assets (net of internal service fund assets of $493,547) |
25,441,841 |
|
|
ACCRUAL OF NON-CURRENT REVENUES AND EXPENSES |
||
|
Unavailable revenue which are deferred inflows of resources in the Governmental Funds because |
||
|
they are not available currently, but are taken into revenue in the statement of activities. |
2,982,579 |
|
|
LONG-TERM ASSETS AND LIABILITIES |
||
|
Long-term liabilities are not due and payable in the current period and therefore are not reported |
||
|
in the Governmental Funds Balance Sheet. |
||
|
Net OPEB liability not reported on the Governmental Funds Balance Sheet |
(578,315) |
|
|
Compensated absences payable |
(83,645) |
|
|
Net pension liability not reported on the Governmental Funds Balance Sheet |
(2,759,739) |
|
|
Lease liability not reported on the Governmental Funds Balance Sheet |
(244,640) |
|
|
DEFERRED INFLOWS AND OUTFLOWS |
||
|
Deferred inflows/(outflows) of resources for not reported on the Governmental Funds Balance |
||
|
Sheet |
||
|
Deferred outflows of resources for net pension liability |
1,285,641 |
|
|
Deferred inflows of resources for net pension liability |
(2,471,384) |
|
|
Deferred outflows of resources for net OPEB liability |
- |
|
|
Deferred inflows of resources for net OPEB liability |
- |
|
|
ALLOCATION OF INTERNAL SERVICE FUND NET POSITION |
||
|
Internal service funds are used by management to charge the costs of certain activities to |
||
|
individual funds. The assets and liabilities of the internal service funds are included in the |
||
|
governmental activities in the Government-wide Statement of Net Position. |
1,000,736 |
|
|
Net Position of Governmental Activities |
$ |
44,879,735 |
The accompanying notes are an integral part of the financial statements
42
Governmental Funds
Statement of Revenues, Expenditures and Changes in Fund Balance
For the year ended June 30, 2022
|
Special Revenue |
|||||||||
|
Landscape |
Successor |
||||||||
|
Maintenance |
Housing |
||||||||
|
General Fund |
District |
Agency |
|||||||
|
REVENUES |
|||||||||
|
Property taxes |
$ |
2,846,766 |
$ |
- |
$ |
- |
|||
|
Program income |
- |
- |
111,400 |
||||||
|
Special parcel taxes and assessments |
- |
1,204,882 |
- |
||||||
|
Sales and use taxes |
563,908 |
- |
- |
||||||
|
Business licenses |
162,881 |
- |
- |
||||||
|
Permits, licenses and fees |
114,026 |
- |
- |
||||||
|
Fines, forfeitures and penalties |
151,409 |
- |
- |
||||||
|
Intergovernmental |
135,233 |
- |
- |
||||||
|
Motor vehicle in-lieu fees |
- |
- |
- |
||||||
|
Other in-lieu fees |
174,443 |
- |
- |
||||||
|
Franchise fees |
587,740 |
- |
- |
||||||
|
Service charges |
305,645 |
- |
- |
||||||
|
Use of money and property |
(185,018) |
(24,383) |
17,961 |
||||||
|
Other revenue |
40,844 |
- |
- |
||||||
|
Total Revenues |
4,897,877 |
1,180,499 |
129,361 |
||||||
|
EXPENDITURES |
|||||||||
|
Current: |
|||||||||
|
General government |
2,570,417 |
- |
- |
||||||
|
Public safety |
2,684,319 |
- |
- |
||||||
|
Public works |
333,423 |
1,424,676 |
- |
||||||
|
Community and economic development |
299,175 |
- |
- |
||||||
|
Parks and recreation services |
336,592 |
- |
- |
||||||
|
Capital outlay |
22,168 |
161,367 |
- |
||||||
|
Total Expenditures |
6,246,094 |
1,586,043 |
- |
||||||
|
Excess (Deficiency) of Revenues |
(1,348,217) |
(405,544) |
129,361 |
||||||
|
Over (Under) Expenditures |
|||||||||
|
OTHER FINANCING SOURCES (USES) |
|||||||||
|
Unrealized gains (losses) |
- |
- |
58,091 |
||||||
|
Transfers in |
1,597,681 |
- |
- |
||||||
|
Transfers out |
- |
(41,809) |
- |
||||||
|
Total Other Financing Sources (Uses) |
1,597,681 |
(41,809) |
58,091 |
||||||
|
Net Change in Fund Balances |
249,464 |
(447,353) |
187,452 |
||||||
|
FUND BALANCES |
|||||||||
|
Beginning of year, restated |
6,163,893 |
1,085,886 |
5,430,243 |
||||||
|
End of fiscal year |
$ |
6,413,357 |
$ |
638,533 |
$ |
5,617,695 |
|||
The accompanying notes are an integral part of the financial statements
43
|
City of Clayton |
|||||||||||||
|
Governmental Funds |
|||||||||||||
|
Statement of Revenues, Expenditures and Changes in Fund Balance |
|||||||||||||
|
For the year ended June 30, 2022 |
|||||||||||||
|
Capital Project |
Other |
||||||||||||
|
Capital |
|||||||||||||
|
American |
Improvement |
Governmental |
|||||||||||
|
Rescue Plan Act |
Program |
Funds |
Total |
||||||||||
|
$ |
- |
$ |
- |
$ |
- |
$ |
2,846,766 |
||||||
|
- |
- |
- |
111,400 |
||||||||||
|
- |
- |
442,230 |
1,647,112 |
||||||||||
|
- |
- |
- |
563,908 |
||||||||||
|
- |
- |
- |
162,881 |
||||||||||
|
- |
- |
140,326 |
254,352 |
||||||||||
|
- |
- |
- |
151,409 |
||||||||||
|
1,467,024 |
- |
1,170,041 |
2,772,298 |
||||||||||
|
- |
- |
- |
- |
||||||||||
|
- |
- |
- |
174,443 |
||||||||||
|
- |
- |
- |
587,740 |
||||||||||
|
- |
- |
- |
305,645 |
||||||||||
|
- |
(80,986) |
(52,490) |
(324,916) |
||||||||||
|
- |
- |
648 |
41,492 |
||||||||||
|
1,467,024 |
(80,986) |
1,700,755 |
9,294,530 |
||||||||||
|
- |
- |
126,650 |
2,697,067 |
||||||||||
|
- |
- |
130,541 |
2,814,860 |
||||||||||
|
- |
- |
383,356 |
2,141,455 |
||||||||||
|
- |
- |
- |
299,175 |
||||||||||
|
- |
- |
140,808 |
477,400 |
||||||||||
|
- |
869,925 |
48,889 |
1,102,349 |
||||||||||
|
- |
869,925 |
830,244 |
9,532,306 |
||||||||||
|
1,467,024 |
(950,911) |
870,511 |
(237,776) |
||||||||||
|
- |
- |
- |
58,091 |
||||||||||
|
- |
1,632,609 |
21,214 |
3,251,504 |
||||||||||
|
(1,467,024) |
- |
(1,742,671) |
(3,251,504) |
||||||||||
|
(1,467,024) |
1,632,609 |
(1,721,457) |
58,091 |
||||||||||
|
- |
681,698 |
(850,946) |
(179,685) |
||||||||||
|
- |
1,924,746 |
2,747,824 |
17,352,592 |
||||||||||
|
$ |
- |
$ |
2,606,444 |
$ |
1,896,878 |
$ |
17,172,907 |
||||||
The accompanying notes are an integral part of the financial statements
44
Reconciliation of Governmental Funds Statement of Revenues, Expenditures and Changes in Fund
Balances to the Statement of Activities and Changes in Net Position
For the year ended June 30, 2022
Net Change in Fund Balances - Total Governmental Funds
Amounts reported for governmental activities in the Statement of Activities are different because:
ACCRUAL OF NON-CURRENT ITEMS
The amounts below included in the Statement of Activities do not provide (or require) the use of current financial resources and therefore are not reported as revenue or expenditures in the Governmental Funds (net change).
Net change in post-employment benefits (OPEB) liability and deferred inflows (outflows) Long-term compensated absences payable
Net change in pension liability and deferred inflows (outflows).
Unavailable revenues
Net change in lease liability
CAPITAL ASSET TRANSACTIONS
Governmental Funds report capital outlays as expenditures. However in the Statement of Activities the cost of those assets is capitalized and allocated over their estimated useful lives and reported as depreciation expense.
Capital asset acquisition, excluding internal service fund asset acquisitions.
Depreciation expense is deducted from the fund balance (Net of internal service fund depreciation of $100,425).
ALLOCATION OF INTERNAL SERVICE FUND ACTIVITY
Internal service funds are used by management to charge the costs of certain activities, such as insurance and fleet management, to individual funds. The net gain or loss of the internal service funds is reported with governmental activities.
Change in Net Position of Governmental Activities on Statement of Activities
$ (179,685)
(74,942)
(745)
730,720
(113,947)
(244,640)
1,217,507
(947,745)
(4,806)
$ 381,717
The accompanying notes are an integral part of the financial statements
45
PROPRIETARY FUNDS
Proprietary funds account for City operations financed and operated in a manner similar to a private business enterprise. The intent of the City is that the cost of providing goods and services be financed primarily through user charges. The City’s proprietary funds can be classified into two fund types: enterprise and internal service funds.
Enterprise Funds:
Enterprise funds are used to report any activity for which a fee is charged to external users for goods or services. The following is the City’s sole major enterprise fund:
Endeavor Hall – Accounts for all rental activities related to operation of the underlying rental facility asset. The primary use of the rental facility has been for wedding receptions and other formal special events.
Internal Service Funds:
The City’s internal service funds account for activities that provide goods or services to other City funds, departments, or agencies on a cost reimbursement basis. All internal service funds of the City are aggregated and presented on the face of the proprietary fund financial statements in one column.
46
|
City of Clayton |
||||||||
|
Proprietary Funds |
||||||||
|
Statement of Net Position |
||||||||
|
June 30, 2022 |
||||||||
|
Business-type |
Governmental |
|||||||
|
Activities - |
Activities - |
|||||||
|
Endeavor Hall |
Internal Service |
|||||||
|
ASSETS |
||||||||
|
Current assets: |
||||||||
|
Cash and investments |
$ |
- |
$ |
460,441 |
||||
|
Noncurrent assets |
||||||||
|
Land |
167,738 |
- |
||||||
|
Depreciable assets, net |
841,465 |
540,610 |
||||||
|
Total Assets |
1,009,203 |
1,001,051 |
||||||
|
LIABILITIES |
||||||||
|
Current liabilities: |
||||||||
|
Accounts payable |
2,671 |
315 |
||||||
|
Other payables |
- |
- |
||||||
|
Deposits payable |
5,500 |
- |
||||||
|
Due to other funds |
120,893 |
- |
||||||
|
Total Liabilities |
129,064 |
315 |
||||||
|
NET POSITION |
||||||||
|
Net investment in capital assets |
1,009,203 |
540,610 |
||||||
|
Unrestricted |
(129,064) |
460,126 |
||||||
|
Total Net Position |
$ |
880,139 |
$ |
1,000,736 |
||||
The accompanying notes are an integral part of the financial statements
47
Proprietary Funds
Statement of Revenues, Expenses and Changes in Net Position
For the year ended June 30, 2022
|
Governmental |
||||||
|
Business-type |
Activities - |
|||||
|
Activities - |
Internal Service |
|||||
|
Endeavor Hall |
Funds |
|||||
|
OPERATING REVENUES |
||||||
|
Charges for current services |
$ |
16,847 |
$ |
111,900 |
||
|
Total Operating Revenues |
16,847 |
111,900 |
||||
|
OPERATING EXPENSES |
||||||
|
Personnel |
4,833 |
- |
||||
|
General and administrative |
26,989 |
8,564 |
||||
|
Depreciation and amortization |
28,872 |
100,425 |
||||
|
Total Operating Expenses |
60,694 |
108,989 |
||||
|
Operating Income (Loss) |
(43,847) |
2,911 |
||||
|
NONOPERATING REVENUES (EXPENSES) |
||||||
|
Gain (loss) on disposal of assets |
- |
6,958 |
||||
|
Investment income |
- |
(14,675) |
||||
|
Total Nonoperating Revenues (Expenses) |
- |
(7,717) |
||||
|
Net (loss) Before Contributions and |
||||||
|
(43,847) |
(4,806) |
|||||
|
Operating Transfers |
||||||
|
Capital contributions |
- |
- |
||||
|
Transfers in / (out) |
- |
- |
||||
|
Change in Net Position |
(43,847) |
(4,806) |
||||
|
NET POSITION: |
||||||
|
Beginning of fiscal year |
923,986 |
1,005,542 |
||||
|
End of fiscal year |
$ |
880,139 |
$ |
1,000,736 |
||
The accompanying notes are an integral part of the financial statements
48
Proprietary Funds
Statement of Cash Flows
For the year ended June 30, 2022
|
Business-type |
Governmental |
|||||
|
Activities - |
||||||
|
Activities - |
Internal Service |
|||||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
Endeavor Hall |
Funds |
||||
|
Receipts from customers |
$ |
20,847 |
$ |
111,900 |
||
|
Payments to suppliers |
(24,734) |
(4,001) |
||||
|
Payments to employees |
(4,833) |
- |
||||
|
Claims paid |
- |
(4,428) |
||||
|
Net cash provided (used) by operating activities |
(8,720) |
103,471 |
||||
|
CASH FLOWS FROM NONCAPITAL FINANCING |
||||||
|
ACTIVITIES: |
||||||
|
Transfers in / (out) |
8,720 |
- |
||||
|
Net cash provided by noncapital financing |
8,720 |
- |
||||
|
activities |
||||||
|
CASH FLOWS FROM CAPITAL AND RELATED |
||||||
|
FINANCING ACTIVITIES: |
||||||
|
Acquisition of fixed assets |
- |
(153,184) |
||||
|
Proceeds from the sale of capital assets |
- |
6,958 |
||||
|
Net cash provided (used) by capital and related |
- |
(146,226) |
||||
|
financing activities |
||||||
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||
|
Interest received on investments |
- |
(14,675) |
||||
|
Net Cash provided by investing activities |
- |
(14,675) |
||||
|
Net increase (decrease) in cash and cash equivalents |
- |
(57,430) |
||||
|
CASH AND CASH EQUIVALENTS: |
||||||
|
Beginning of fiscal year |
- |
517,871 |
||||
|
End of fiscal year |
$ |
- |
$ |
460,441 |
||
|
RECONCILIATION OF OPERATING INCOME |
||||||
|
(LOSS) TO NET CASH PROVIDED (USED) BY |
||||||
|
OPERATING ACTIVITIES: |
||||||
|
Operating income (loss) |
$ |
(43,847) |
$ |
2,911 |
||
|
Adjustments to reconcile operating income (loss) |
||||||
|
to net cash provided (used) by operating activities: |
||||||
|
Depreciation and amortization |
28,872 |
100,425 |
||||
|
Changes in current assets and liabilities: |
||||||
|
Increase (decrease) in accounts payable |
2,255 |
135 |
||||
|
Increase (decrease) in deposits payable |
4,000 |
- |
||||
|
Increase (decrease) in interfund payables |
- |
- |
||||
|
Net cash provided (used) by operating activities |
$ |
(8,720) |
$ |
103,471 |
||
The accompanying notes are an integral part of the financial statements
49
FIDUCIARY FUNDS
Fiduciary funds report assets held in a trustee or agency capacity for others and therefore cannot be used to support the government’s own programs. The City’s fiduciary funds can be classified into two fund types: agency and private purpose trust funds.
Agency Funds:
Agency funds are custodial in nature (assets equal liabilities) and do not involve measurements of results of operations. They are used to account for assets held in an agency capacity for others and therefore cannot be used to support the City's program. Agency funds are accounted for using the economic resources measurement focus and the accrual basis of accounting.
Private Purpose Trust Funds
Private purpose trust funds account for resources held by the City as trustee for third party beneficiaries, and are used to report both the Fiduciary Net Position and Changes in Fiduciary Net Position for the Successor Agency for the former Redevelopment Agency. Private Purpose Trust Funds are accounted for under the full accrual basis of accounting.
50
Fiduciary Funds
Statement of Fiduciary Net Position
June 30, 2022
|
Private Purpose |
||||||
|
Trust Fund |
||||||
|
Redevelopment |
||||||
|
Successor |
||||||
|
Agency |
Agency Funds |
|||||
|
ASSETS |
||||||
|
Cash and investments |
$ |
526,807 |
$ |
1,632,920 |
||
|
Cash and investments with fiscal agents |
1 |
376,103 |
||||
|
Accounts receivable |
- |
10,188 |
||||
|
Other assets |
- |
967 |
||||
|
Assessments receivable |
- |
655,931 |
||||
|
Due from bondholders |
- |
182,883 |
||||
|
Notes receivable |
52,607 |
- |
||||
|
Investment in bonds |
- |
470,000 |
||||
|
Total Assets |
579,415 |
3,328,992 |
||||
|
LIABILITIES |
||||||
|
Accounts payable |
- |
16,378 |
||||
|
Other liabilities |
- |
1,455,651 |
||||
|
Deposits payable |
- |
774,539 |
||||
|
Accrued interest payable |
10,973 |
- |
||||
|
Advance from Successor Housing Agency |
- |
- |
||||
|
Notes payable |
- |
52,606 |
||||
|
Bonds payable |
1,145,000 |
1,029,818 |
||||
|
Total Liabilities |
1,155,973 |
$ |
3,328,992 |
|||
|
DEFERRED INFLOWS OF RESOURCES |
- |
|||||
|
Deferred notes receivables |
||||||
|
Total Deferred Inflows of Resources |
- |
|||||
|
NET POSITION |
(576,558) |
|||||
|
Held in trust for others |
||||||
|
Total Net Position |
$ |
(576,558) |
||||
The accompanying notes are an integral part of the financial statements
51
|
City of Clayton |
|||||
|
Fiduciary Funds |
|||||
|
Statement of Changes in Fiduciary Net Position |
|||||
|
For the year ended June 30, 2022 |
|||||
|
Private Purpose |
|||||
|
Trust Fund |
|||||
|
Redevelopment |
|||||
|
Successor |
|||||
|
ADDITIONS |
Agency |
||||
|
Tax increment revenue |
$ |
618,554 |
|||
|
Program revenue |
2,121 |
||||
|
Investment gain (loss) |
(15,186) |
||||
|
Total Additions |
605,489 |
||||
|
DEDUCTIONS |
|||||
|
Interest expense |
24,141 |
||||
|
Administrative costs |
252,179 |
||||
|
Other expenses |
- |
||||
|
Total Deductions |
276,320 |
||||
|
Changes in Net Position |
329,169 |
||||
|
NET POSITION |
|||||
Beginning of Year
End of Year
(905,727)
$ (576,558)
The accompanying notes are an integral part of the financial statements
52
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13
FINANCIAL SECTION
14
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15
INDEPENDENT AUDITORS’
REPORT
16
INDEPENDENT AUDITOR’S REPORT
To the City Council
City of Clayton, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Clayton, Clayton, as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the City of Clayton’s basic financial statements as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Clayton, as of June 30, 2022, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards , issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City of Clayton and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Clayton’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
17
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards , we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City of Clayton’s internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Clayton’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, pension plan funding status, other postemployment benefits plan funding status, and budgetary comparison information on pages 21-31 and 103-111 be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Clayton’s basic financial statements. The accompanying combining and individual nonmajor fund financial statements are presented for purposes of additional analysis and
18
19
MANAGEMENT’S DISCUSSION AND ANALYSIS
20
Management of the City of Clayton (the "City") provides this Management’s Discussion and Analysis of the City's Basic Financial Statements for readers of the City's financial statements. This narrative overview and analysis of the financial activities of the City is for its fiscal year ended June 30, 2022. We encourage readers to consider this information in conjunction with the additional information that is furnished with the City's financial statements, which follow.
FINANCIAL HIGHLIGHTS - PRIMARY GOVERNMENT Government -Wide Highlights
Net Position - The assets of the City of Clayton exceeded its liabilities at the close of the year ended June 30, 2022, by $45,759,874. Of this amount, $5,744,418 was reported as "unrestricted net position" and may be used to meet the ongoing obligations to citizens and creditors.
Changes in Net Position - The City's total net position increased by $337,870 in the fiscal year ending June 30, 2022. Net position of governmental activities increased by $381,717, while net position of business-type activities decreased by $43,847.
Major Fund Highlights
Governmental Funds – As of the year ended June 30, 2022, the City's governmental funds reported a combined ending fund balance of $17,172,907. Of this amount $5,744,867 represents "unassigned fund balances" available for appropriation.
General Fund - The unassigned fund balance of the General Fund on June 30, 2022 was $5,744,867, while the non-spendable and committed fund balances were $173,471 and $495,019 respectively.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City of Clayton's basic financial statements. The City of Clayton's basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements and 3) notes to the financial statements. This report also contains required supplementary information and supplemental information in addition to the basic financial statements themselves.
Government-wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview of the City of Clayton's finances, in a manner similar to a private-sector business.
The statement of net position presents information on all of the City of Clayton's assets and liabilities, with the difference between the two reported as net position . Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City of Clayton is improving or deteriorating.
21
OVERVIEW OF THE FINANCIAL STATEMENTS, Continued Government-wide Financial Statements, Continued
The statement of activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows . Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e. g. uncollected taxes and earned but unused vacation leave).
Both of the government-wide financial statements distinguish functions of the City of Clayton that are principally supported by taxes and intergovernmental revenues ( governmental activities ) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges ( business-type activities ). The governmental activities of the City of Clayton include general government, public safety, public works, community and economic development, and parks and recreation services. The business-type activities of the City of Clayton include the activities of the Endeavor Hall enterprise fund.
Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Clayton, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City of Clayton can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.
Governmental Funds
Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources , as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government- wide financial statements. By doing so, readers may better understand the long- term impact of the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities .
22
OVERVIEW OF THE FINANCIAL STATEMENTS, Continued Fund Financial Statements, Continued
The City of Clayton maintains fifteen individual governmental funds. Information is presented separately in the government funds balance sheet and governmental funds statement of revenues, expenditures, and changes in fund balances for the General Fund, Landscape Maintenance District, Housing Successor Agency, and Capital Improvement Program, all of which are reported as major funds.
Proprietary Funds
The City of Clayton maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government- wide financial statements. The City of Clayton uses an enterprise fund to account for its Endeavor Hall activities. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City of Clayton various functions. City of Clayton uses three internal service funds to account for its capital equipment replacement program, self-insurance activities, and extraordinary employer pension contribution fluctuations. Because these services predominantly benefit governmental rather that business-type functions, they have been included within governmental activities in the government-wide financial statements.
Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The City’s sole enterprise fund is considered to be a major fund. The internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements.
Fiduciary Funds
The City is the fiscal agent for benefit assessment districts and other parties holding amounts collected which await payment as directed. The City’s fiduciary activities are reported in the separate statement of fiduciary net position and the agency funds statement of assets and liabilities. These activities are excluded from the City’s other financial statements because the City is acting as a trustee for these funds and cannot use these assets to finance its own operations. The City’s fiduciary funds include a private-purpose trust fund to account for the activities of the City of Clayton Redevelopment Successor Agency.
Notes to the Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. The notes to the financial statements can be found on pages 55-101 of this report.
23
OVERVIEW OF THE FINANCIAL STATEMENTS, Continued Other Information
In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City’s progress in funding its obligation to provide pension and other post -employment benefits to its employees as well as budgetary information for the General Fund and each of the major governmental funds.
FINANCIAL ANALYSIS GOVERNMENT-WIDE STATEMENTS Analysis of Overall Net Position and Results of Operations
As noted previously, net position may serve over time as a useful indicator of a government's financial position. The City’s total net position was $45,759,874 at June 30, 2022, which is an increase of $392,782 from the prior year’s restated net position at June 30, 2021.
The largest portion of the City’s net position reflects its investment in capital assets (e. g. land, buildings, etc. ) net of any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens and these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The following is condensed comparative Statements of Net Position for the fiscal years ended June 30, 2022 and June 30, 2021:
|
Business- |
Business- |
|||||||||||||||||
|
Governmental |
Governmental |
Type |
Type |
|||||||||||||||
|
Activities |
Activities |
Activities |
Activities |
Total |
Total |
|||||||||||||
|
Assets |
2022 |
2021 |
2022 |
2021 |
2022 |
2021 |
||||||||||||
|
Current Assets |
$ |
14,773,722 |
$ |
14,812,813 |
$ |
(120,893) |
$ |
(112,174) |
$ |
14,652,829 |
$ |
14,700,639 |
||||||
|
Noncurrent Assets |
6,482,003 |
6,462,021 |
- |
- |
6,482,003 |
6,462,021 |
||||||||||||
|
Capital Assets |
29,116,205 |
28,793,685 |
1,009,203 |
1,038,076 |
30,125,408 |
29,831,761 |
||||||||||||
|
Total Assets |
||||||||||||||||||
|
50,371,930 |
50,068,519 |
888,310 |
925,902 |
51,260,240 |
50,994,421 |
|||||||||||||
|
Deferred outflows |
1,285,641 |
1,051,589 |
- |
- |
1,285,641 |
1,051,589 |
||||||||||||
|
Liabilities |
||||||||||||||||||
|
Current Liabilities |
640,113 |
362,937 |
8,171 |
1,916 |
648,284 |
364,853 |
||||||||||||
|
Noncurrent Liabilities |
3,666,339 |
5,944,104 |
- |
- |
3,666,339 |
5,944,104 |
||||||||||||
|
Total Liabilities |
||||||||||||||||||
|
4,306,452 |
6,307,041 |
8,171 |
1,916 |
4,314,623 |
6,308,957 |
|||||||||||||
|
Deferred inflows |
2,471,384 |
369,961 |
- |
- |
2,471,384 |
369,961 |
||||||||||||
|
Net Position |
||||||||||||||||||
|
Net investment in |
||||||||||||||||||
|
capital assets |
29,116,205 |
28,793,685 |
1,009,203 |
1,038,076 |
30,125,408 |
29,831,761 |
||||||||||||
|
Restricted |
9,890,048 |
13,156,670 |
- |
- |
9,890,048 |
13,156,670 |
||||||||||||
|
Unrestricted |
5,873,482 |
2,492,751 |
(129,064) |
(114,090) |
5,744,418 |
2,378,661 |
||||||||||||
|
Total net position |
||||||||||||||||||
|
$ |
44,879,735 |
$ |
44,443,106 |
$ |
880,139 |
$ |
923,986 |
$ |
45,759,874 |
$ |
45,367,092 |
|||||||
24
FINANCIAL ANALYSIS GOVERNMENT-WIDE STATEMENTS, Continued Analysis of Overall Net Position and Results of Operations, Continued
Of the City’s total net position, $9,890,048 (21.6%) represents resources that are subject to external restrictions on how they may be used. The balance of the unrestricted net position of $5,744,418 (12.6%) may be used to meet the City's ongoing obligations to citizens and creditors. City revenues for the year, including both governmental and business-type activities, were $9,359,704, while expenses totaled $9,021,834, resulting in a net increase in net position of $337,870 excluding transfers, extraordinary and special items. This net increase was primarily attributable to a increase in net position of governmental activities, which is discussed in greater detail in the following section.
The following is a recap of the City’s Statement of Activities and Changes in Net Position for the fiscal years ended June 30, 2022 and June 30, 2021:
|
Business- |
Business- |
||||||||||||||||||
|
Governmental |
Governmental |
Type |
Type |
||||||||||||||||
|
Activities |
Activities |
Activities |
Activities |
Total |
Total |
||||||||||||||
|
Revenues: |
2022 |
2021 |
2022 |
2021 |
2022 |
2021 |
|||||||||||||
|
Program revenues: |
|||||||||||||||||||
|
Charges for Services |
$ |
1,002,338 |
$ |
961,910 |
$ |
16,847 |
$ |
(1,442) |
$ |
1,019,185 |
$ |
960,468 |
|||||||
|
Operating grants and contributions |
2,755,382 |
893,718 |
- |
- |
2,755,382 |
893,718 |
|||||||||||||
|
Capital grants and contributions |
120,774 |
42,363 |
- |
- |
120,774 |
42,363 |
|||||||||||||
|
Total program revenues |
|||||||||||||||||||
|
3,878,494 |
1,897,991 |
16,847 |
(1,442) |
3,895,341 |
1,896,549 |
||||||||||||||
|
General revenues: |
|||||||||||||||||||
|
Property taxes |
2,846,766 |
2,722,906 |
- |
- |
2,846,766 |
2,722,906 |
|||||||||||||
|
Special parcel taxes |
1,348,657 |
1,309,373 |
- |
- |
1,348,657 |
1,309,373 |
|||||||||||||
|
Sales and use taxes |
563,908 |
510,029 |
- |
- |
563,908 |
510,029 |
|||||||||||||
|
Business license taxes |
162,881 |
90,872 |
- |
- |
162,881 |
90,872 |
|||||||||||||
|
Franchise fees |
587,740 |
567,350 |
- |
- |
587,740 |
567,350 |
|||||||||||||
|
Payments in lieu of taxes |
174,443 |
171,029 |
- |
- |
174,443 |
171,029 |
|||||||||||||
|
Investment income |
(281,502) |
508,256 |
(379) |
(281,502) |
507,877 |
||||||||||||||
|
Miscellaneous |
54,512 |
38,972 |
- |
- |
54,512 |
38,972 |
|||||||||||||
|
Gain (loss) on sale of assets |
6,958 |
1,741 |
- |
- |
6,958 |
1,741 |
|||||||||||||
|
Total general revenues |
|||||||||||||||||||
|
5,464,363 |
5,920,528 |
(379) |
5,464,363 |
5,920,149 |
|||||||||||||||
|
Total revenues |
|||||||||||||||||||
|
9,342,857 |
7,818,519 |
16,847 |
(1,821) |
9,359,704 |
7,816,698 |
||||||||||||||
|
Expenses: |
|||||||||||||||||||
|
General government |
2,629,048 |
1,796,454 |
- |
- |
2,629,048 |
1,796,454 |
|||||||||||||
|
Public works |
2,509,096 |
2,909,710 |
- |
- |
2,509,096 |
2,909,710 |
|||||||||||||
|
Public safety |
2,736,817 |
2,980,000 |
- |
- |
2,736,817 |
2,980,000 |
|||||||||||||
|
Community and economic |
|||||||||||||||||||
|
development |
356,450 |
357,133 |
- |
- |
356,450 |
357,133 |
|||||||||||||
|
Parks and recreation services |
729,729 |
592,433 |
- |
- |
729,729 |
592,433 |
|||||||||||||
|
Endeavor Hall |
- |
- |
60,694 |
73,117 |
60,694 |
73,117 |
|||||||||||||
|
Total expenses |
|||||||||||||||||||
|
8,961,140 |
8,635,730 |
60,694 |
73,117 |
9,021,834 |
8,708,847 |
||||||||||||||
|
Change in Net Position |
381,717 |
(817,211) |
(43,847) |
(74,938) |
337,870 |
(892,149) |
|||||||||||||
|
Net Position – Beginning, restated |
|||||||||||||||||||
|
44,498,018 |
45,260,317 |
923,986 |
998,924 |
45,422,004 |
46,259,241 |
||||||||||||||
|
Net Position – ending |
|||||||||||||||||||
|
$ |
44,879,735 |
$ |
44,443,106 |
$ |
880,139 |
$ |
923,986 |
$ |
45,759,874 |
$ |
45,367,092 |
||||||||
25
FINANCIAL ANALYSIS GOVERNMENT-WIDE STATEMENTS, Continued Analysis of Governmental Activities
The increase in net position of the governmental activities over the prior year was primarily attributable to a increase in both operating and capital grants and contributions. Total expenses were $8,961,140 in the current year compared to $8,635,730 in the prior year. The following chart depicts the relative size of expenses by function for the fiscal years ending June 30, 2022 and 2021:
Government Activities
Expenses by Function
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
-
General
Government
Public Safety
Public Works Community Parks and
and Economic Recreation
Development Services
Fiscal Year 2021
Fiscal Year 2022
Total program revenues from governmental activities were $ 3,878,494 in the current year compared to $1,897,991 in the prior year. Program revenues are derived directly from the program itself or from parties outside the reporting government's taxpayers or citizenry. They reduce the net cost of the function to be financed from government's general revenues. Of the governmental program revenues, 25.8% were derived from charges for services, which includes park use fees, rental fees, licenses and permits, planning services fees, engineering plan check fees, police service fees, and other revenues. The remaining 74.2% of the governmental program revenues came from operating and capital grants and contributions. General revenues are all other revenues not categorized as program revenues such as property taxes, special parcel taxes, sales and use taxes, motor vehicle fees, investment earnings, franchise fees, use of money and property, service charges, and miscellaneous revenues.
26
F INANCIAL ANALYSIS GOVERNMENT-WIDE STATEMENTS, Continued Analysis of Governmental Activities, Continued
Total general revenues from governmental activities decreased by $456,165 (7.7%) over the prior year. The following pie charts depict the relative size of governmental activities program and general revenues by source for the fiscal years ending June 30, 2022 and 2021:
|
Governmental Activities |
|
|
Revenues by Source |
|
|
$6,000,000 |
|
|
$5,000,000 |
|
|
$4,000,000 |
|
|
$3,000,000 |
|
|
$2,000,000 |
|
|
$1,000,000 |
|
|
$- |
|
|
$(1,000,000) |
|
|
Fiscal Year 2021 |
Fiscal Year 2022 |
Analysis of Business-Type Activities
Total business-type expenses decreased 20.4% from $73,117 in the prior year to $60,694 in the current year. This decrease is largely attributable to the decrease in general and administrative costs of the Endeavor Hall rental facility. Total services revenue increased significantly from $-1,442 in the prior year to $16,847 in the current year due to the increase in rental activity. Net position of business -type activities declined $43,847 to a total of $ 880,139 at June 30, 2022 due to charges for services being insufficient to cover the annual depreciation expense and general operating expenses of underlying Endeavor Hall rental facility assets.
27
FINANCIAL ANALYSIS OF INDIVIDUAL FUND STATEMENTS Analysis of Governmental Funds
The focus of the City of Clayton's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of Clayton's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year.
As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $17,172,907. Of this amount, $5,744,867 (33.5%) is unassigned; $173,471(1.0%) is in non-spendable form; $3,330,153 (19.4%) is assigned for specific purposes; $6,719,595 (39.1%) is restricted by law, regulation, or other outside contractual agreements; and $1,204,821 (7.0%) is committed for specific expenditures in the future.
General Fund
The City’s General Fund reported an increase in fund balance of $249,464 (4.0%) in the current fiscal year. This modest increase is mostly attributable to increase in property taxes, special parcel taxes and assessments, and a corresponding decrease in investment earnings (primarily due to market rate adjustments). Total fund balance of the General Fund is $6,413,357 as of June 30, 2022, of which $5,744,867 (89.6%) is reported as unassigned and available for appropriation. This unassigned fund balance is .92 times the size of the General Fund’s adopted operating budget for the upcoming fiscal year ending June 30, 2022.
Below is a summary of the General Fund expenditures by department.
|
Pandemic |
|||||||||||||
|
Rainy |
Recovery |
||||||||||||
|
General government |
General Fund |
Day Fund |
Reserve |
Total |
|||||||||
|
$ |
1,447,700 |
$ |
26,000 |
$ |
1,096,717 |
$ |
2,570,417 |
||||||
|
Public safety |
2,684,319 |
- |
- |
2,684,319 |
|||||||||
|
Public works |
333,423 |
- |
- |
333,423 |
|||||||||
|
Community and |
|||||||||||||
|
economic development |
299,175 |
- |
- |
299,175 |
|||||||||
|
Parks and recreation |
|||||||||||||
|
services |
336,592 |
- |
- |
336,592 |
|||||||||
|
Capital outlay |
22,168 |
- |
- |
22,168 |
|||||||||
|
Total expenditures |
$ |
5,123,377 |
$ |
26,000 |
$ |
1,096,717 |
$ |
6,246,094 |
|||||
Landscape Maintenance District
Community Facilities District No. 2007-1, referred to as the Landscape Maintenance District special revenue fund, reported a decrease in fund balance of $447,353 (41.2%) in the current fiscal year. This decrease in fund balance is largely attributable to increases in operating costs such as water service and weed abatement, as well as a increase in project costs/capital outlay costs. Total fund balance of the Landscape Maintenance District is $ 638,533 as of June 30, 2022, of which $ 32,509 is reported as assigned or restricted for the following year’s operating budget, and the remaining fund balance is assigned.
28
FINANCIAL ANALYSIS OF INDIVIDUAL FUND STATEMENTS, Continued Analysis of Governmental Funds, Continued
Successor Housing Agency
The Successor Housing Agency special revenue fund reported a increase in fund balance of $187,452 (3.4%) in the current fiscal year. This increase in fund balance resulted primarily from unspent program revenue on housing loan repayments as well as unrealized gains on the inventory of affordable income housing. Total fund balance of the Successor Housing Agency is $5,617,695 as of June 30, 2022, which is classified entirely as restricted.
Capital Improvement Program
The Capital Improvement Program capital projects fund reported an increase in fund balance of $681,698 (35.4%) in the current fiscal year. This increase in fund balance primarily arose from timing differences between project execution and funding. Total fund balance of the Capital Improvement Program fund is $2,606,444 and is reported entirely as assigned for capital projects as of June 30, 2022.
Analysis of Proprietary Funds
The City of Clayton's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The net position of the City’s only major enterprise fund, Endeavor Hall, at the end of the year was $880,139, and total net position for the internal service funds amounted to $1,000,736.
GENERAL FUND BUDGETARY HIGHLIGHTS
General Fund actual revenues and transfers fall short of total revenues and transfers of the final and adopted budget by $39,744. The variance is due to a combination of factors including an increase in taxes and assessment and a decrease in the investment reported at year-end based on the market rate. The unrealized investment loss was reported as a direct result of the City’s investment portfolio being largely made up of fixed instrument securities during a time of declining interest rates. As noted in recent quarterly investment portfolio reports presented to the City Council, the City’s investment policy is designed to reduce volatility and generate consistent returns in the long run-in order to protect public funds. Actual property tax revenues exceeded somewhat conservative adopted budgetary growth projections by $186,163 (6.9%), which was largely offset by lower-than-expected revenue from permits, licenses and fees and sales tax receipts.
29
GENERAL FUND BUDGETARY HIGHLIGHTS, Continued
Actual General Fund expenditures of $6,246,094 were more than the final adjusted budget by $1,447,307 for the year ended June 30, 2022. The negative variance is a result of actual expenditures being more than budgeted in General government due to investments in the capital expenditures for the fiscal year ended June 30, 2022.
CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets
The City’s investment in capital assets for its governmental and business-type activities as of June 30, 2022 amounted to $30,125,408 (net of accumulated depreciation). This investment in capital assets includes land, building, improvements, machinery and equipment, park facilities, corporate yard building, and roads. Total depreciation expense on governmental assets totaled $1,048,171, versus $1,080,713 in the prior year. The slight decrease in depreciation is attributable to the completion of significant capital projects during the prior and current fiscal years and capital assets reaching their estimated useful lives. Additional information on the City of Clayton's capital assets can be found in Note 6 of this report.
Debt Administration
The remaining debt of the former Clayton Redevelopment Agency (RDA) of $ 5,835,000 was transferred to the Successor Agency on February 1, 2012 (fiscal year ending June 30, 2012) . The City has no outstanding general obligation debt. The Successor Agency has maintained its "AAA" credit rating (S&P) on outstanding Tax Allocation Bonds. Additional information on the Successor Agency's long-term debt can be found in Note 13 of this report.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET
As the City of Clayton is largely a residential community the annual General Fund operating budget relies heavily on property taxes to finance annual operating appropriations rather than other sources of revenue larger and more commercially and industrial developed municipalities have access to (i. e. sales and transient occupancy taxes). The City strives to meet the ever evolving needs of local residents and businesses within the constraints of limited and sometimes restrictive revenue sources.
There was an increase in adopted General Fund operating appropriations when compared to the actuals reported as of June 30, 2022, for the upcoming fiscal year ending June 30, 2023 of $641,365 (10.2%) . The increase in appropriations is attributable primarily to labor wage and benefit costs of various City departments and capital improvement costs included as part of the general government. The annual June 2021 to June 2022 consumer price index inflationary factor is 6.8% as published by the U. S. Bureau of Labor and Statistics for the San Francisco-Oakland-Hayward region. In addition, there are projected decreases in the annual CalPERS unfunded accrued liabilities and normal costs, primarily due to Classic Tier employees retiring and new employees being hired in the PEPRA tier. The adopted budget for the fiscal year ending June 30, 2023 projects total General Fund revenues of $6,887,459 an increase of approximately
30
Management’s Discussion and Analysis
For the year ended June 30, 2022
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET, Continued
$34,920 over the prior year actual. The projected revenue growth reflects continued growth in property tax and sales and use taxes supported by actual results reported in the fiscal year ending June 30, 2022.
REQUEST FOR INFORMATION
This financial report is designed to provide a general overview of the City of Clayton's finances for all those with an interest in the City's finances. Questions concerning any of the information provided in this report, or requests for additional financial information, should be addressed to the Office of the Finance Manager, 6000 Heritage Trail, Clayton, California 94517.
31
GOVERNMENT-WIDE
FINANCIAL STATEMENTS
32
| Governmental Activities | Business Type Activities | Total Primary Government | |
|---|---|---|---|
| ASSETS | |||
| Current Assets: | |||
| Cash And Cash Equivalents And Investments |
$ |
$ |
$ |
| Accounts Receivable Net Of Allowance |
|
|
|
| Accrued Interest Receivable |
|
|
|
| Internal Balance |
|
( |
|
| Prepaid Expenses |
|
|
|
| Total Current Assets |
|
( |
|
| Noncurrent Assets: | |||
| Other Capital Assets |
|
|
|
| Notes And Loans Receivable Net Noncurrent |
|
|
|
| Capital Assets Not Being Depreciated |
|
|
|
| Capital Assets Being Depreciated Net |
|
|
|
| Total Noncurrent Assets |
|
|
|
| Total Assets |
|
|
|
| DEFERRED OUTFLOWS OF RESOURCES | |||
| Deferred Outflows Of Resources Pension |
|
|
|
| Deferred Outflows Of Resources OPEB |
|
|
|
| Total Deferred Outflows of Resources |
|
|
|
| LIABILITIES | |||
| Current Liabilities: | |||
| Accounts Payable |
|
|
|
| Deposits Held for Others |
|
|
|
| Accrued Wages Payable |
|
|
|
| Unearned Revenue |
|
|
|
| Compensated Absences Payable Current |
|
|
|
| Other Current Liabilities |
|
|
|
| Total Current Liabilities |
|
|
|
| Noncurrent Liabilities: | |||
| Compensated Absences Payable Non Current |
|
|
|
| Net OPEB Liability |
|
|
|
| Net Pension Liability |
|
|
|
| Leases Payable Due In More Than One Year |
|
|
|
| Total Noncurrent Liabilities |
|
|
|
| Total Liabilities |
|
|
|
| DEFERRED INFLOWS OF RESOURCES | |||
| Deferred Inflows Of Resources Pension |
|
|
|
| Deferred Inflows Of Resources OPEB |
|
|
|
| Total Deferred Inflows of Resources |
|
|
|
| NET POSITION | |||
| Net Investment In Capital Assets |
|
|
|
| Restricted Net Position For Other |
|
|
|
| Total Net Position |
|
|
|
| Expenses | Charges For Services | Operating Grants And Contributions | Capital Grants And Contributions | Governmental Activities | Business Type Activities | Total Primary Government | |
|---|---|---|---|---|---|---|---|
| PRIMARY GOVERNMENT | |||||||
| Governmental Activities: | |||||||
| General Government |
$ |
$ |
$ |
$ |
$ ( |
$ |
$ ( |
| Public Safety Services |
|
|
|
|
( |
|
( |
| Public Works Services |
|
|
|
|
|
|
|
| Community and Economic Development Services |
|
|
|
|
( |
|
( |
| Parks and Recreation |
|
|
|
|
( |
|
( |
| Total Governmental Activities |
|
|
|
|
( |
|
( |
| Business-type Activities: | |||||||
| Convention Center Services |
|
|
|
|
|
( |
( |
| Total Business-type Activities |
|
|
|
|
|
( |
( |
| Total Primary Government |
|
|
|
|
( |
( |
( |
| COMPONENT UNITS | |||||||
| Total Component Units |
|
|
|
|
|
|
|
| GENERAL REVENUES AND TRANSFERS | |||||||
| General revenues: | |||||||
| Property Tax |
|
|
|
||||
| Special Assessments |
|
|
|
||||
| Sales and Use Tax |
|
|
|
||||
| Business License Tax |
|
|
|
||||
| Fines and Forfeitures and Penalties |
|
|
|
||||
| Payment in Lieu of Taxes |
|
|
|
||||
| Investment Income |
( |
|
( |
||||
| Other General Revenues |
|
|
|
||||
| Gain (Loss) on Sale of Capital Assets |
|
|
|
||||
| Total General Revenues |
|
|
|
||||
| Transfers: | |||||||
| Total Transfers |
|
|
|
||||
| Total General Revenues and Transfers |
|
|
|
||||
| NET POSITION | |||||||
| Change in Net Position |
|
( |
|
||||
| Net position (deficit), beginning of year |
|
|
|
||||
| Net position (deficit), end of year |
|
|
|
| General Fund | Landscape Maintenance District | Successor Housing Agency | American Rescue Plan Act | Capital Improvement Program | Other Governmental Funds | Total Governmental Funds | |
|---|---|---|---|---|---|---|---|
| ASSETS | |||||||
| Pooled Cash And Investments |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
| Accounts Receivable Net Of Allowance |
|
|
|
|
|
|
|
| Accrued Interest Receivable |
|
|
|
|
|
|
|
| Other Assets |
|
|
|
|
|
|
|
| Notes Receivable |
|
|
|
|
|
|
|
| Prepaid Deposits |
|
|
|
|
|
|
|
| Due from Others |
|
|
|
|
|
|
|
| Travel Advances Receivable |
|
|
|
|
|
|
|
| Total Assets |
|
|
|
|
|
|
|
| LIABILITIES | |||||||
| Accounts Payable |
|
|
|
|
|
|
|
| Other Liabilities |
|
|
|
|
|
|
|
| Accrued Wages Payable |
|
|
|
|
|
|
|
| Compensated Absences Payable |
|
|
|
|
|
|
|
| Unearned Revenue |
|
|
|
|
|
|
|
| Total Liabilities |
|
|
|
|
|
|
|
| DEFERRED INFLOW OF RESOURCES | |||||||
| Other Deferred Inflows Of Resources |
|
|
|
|
|
|
|
| Total Deferred Inflows of Resources |
|
|
|
|
|
|
|
| FUND BALANCES | |||||||
| Fund Balance Nonspendable |
|
|
|
|
|
|
|
| Fund Balance Restricted |
|
|
|
|
|
|
|
| Fund Balance Committed |
|
|
|
|
|
|
|
| Fund Balance Assigned |
|
|
|
|
|
|
|
| Fund Balances Unassigned |
|
|
|
|
|
|
|
| Total Fund Balances |
|
|
|
|
|
|
|
| Total Liabilities, Deferred Inflows of Resources and Fund Balances |
|
|
|
|
|
|
|
| Amount | |
|---|---|
| Fund balances for governmental funds | 17,172,907 |
| CAPITAL ASSETS | |
| Capital assets used in governmental activities are not current financial resources and therefore are not reported in the Governmental Funds Balance Sheet. | |
| Non-depreciable capital assets | 3,133,754 |
| Depreciable capital assets (net of internal service fund assets of $493,547) | 25,441,841 |
| ACCRUAL OF NON-CURRENT REVENEUS AND EXPENSES | |
| Unavailable revenue which are deferred inflows of resources in the Governmental Funds because they are not available currently, but are taken into revenue in the statement of activities. | 2,982,579 |
| LONG-TERM ASSETS AND LIABILITIES | |
| Long-term liabilities are not due and payable in the current period and therefore are not reported in the Governmental Funds Balance Sheet. | |
| Net OPEB liability not reported on the Governmental Funds Balance Sheet | 578,315 |
| Compensated absences payable | 83,645 |
| Net pension liability not reported on the Governmental Funds Balance Sheet | 2,759,739 |
| Lease liability not reported on the Governmental Funds Balance Sheet | 244,640 |
| DEFERRED INFLOWS AND OUTFLOWS | |
| Deferred inflows/(outflows) of resources for not reported on the Governmental Funds Balance Sheet | |
| Deferred outflows of resources for net pension liability | 1,285,641 |
| Deferred inflows of resources for net pension liability | 2,471,384 |
| Deferred outflows of resources for net OPEB liability | |
| Deferred inflows of resources for net OPEB liability | |
| ALLOCATION OF INTERNAL SERVICE FUND NET POSITION | |
| Internal service funds are used by management to charge the costs of certain activities to individual funds. The assets and liabilities of the internal service funds are included in the governmental activities in the Government-wide Statement of Net Position. | 1,000,736 |
| Net Position of Governmental Activities | 44,879,735 |
| General Fund | Landscape Maintenance District | Successor Housing Agency | American Rescue Plan Act | Capital Improvement Program | Other Governmental Funds | Total Governmental Funds | |
|---|---|---|---|---|---|---|---|
| REVENUES | |||||||
| Property Tax |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
| Grants and Entitlements Restricted for Specific Programs |
|
|
|
|
|
|
|
| Special Assessments |
|
|
|
|
|
|
|
| Sales and Use Tax |
|
|
|
|
|
|
|
| Business Licenses and Permits |
|
|
|
|
|
|
|
| Licenses and Permits and Franchise Fees |
|
|
|
|
|
|
|
| Fines and Forfeitures and Penalties |
|
|
|
|
|
|
|
| Grants, Contributions and Donations from Federal Governmental Entities |
|
|
|
|
|
|
|
| Vehicles Tax |
|
|
|
|
|
|
|
| Payment in Lieu of Taxes |
|
|
|
|
|
|
|
| Cable Franchise Fees |
|
|
|
|
|
|
|
| Charges for Services, Fees |
|
|
|
|
|
|
|
| Use of Money and Property |
( |
( |
|
|
( |
( |
( |
| Other Revenues |
|
|
|
|
|
|
|
| Total Revenues |
|
|
|
|
( |
|
|
| EXPENDITURES | |||||||
| General Government Services, Administration |
|
|
|
|
|
|
|
| Public Safety Services |
|
|
|
|
|
|
|
| Public Works Services |
|
|
|
|
|
|
|
| Community And Economic Development Services |
|
|
|
|
|
|
|
| Parks and Recreation Department |
|
|
|
|
|
|
|
| Capital Outlay |
|
|
|
|
|
|
|
| Total Expenditures |
|
|
|
|
|
|
|
| Excess (Deficiency) of Revenues Over (Under) Expenditures |
( |
( |
|
|
( |
|
( |
| OTHER FINANCING SOURCES (USES) | |||||||
| Other Financing Sources (Uses) |
|
|
|
|
|
|
|
| Transfers In |
|
|
|
|
|
|
|
| Transfers Out |
|
( |
|
( |
|
( |
( |
| Total Other Financing Sources (Uses) |
|
( |
|
( |
|
( |
|
| Net Change in Fund Balances |
|
( |
|
|
|
( |
( |
| FUND BALANCES | |||||||
| Beginning of year, restated |
|
|
|
|
|
|
|
| End of fiscal year |
|
|
|
|
|
|
|
| Amount | |
|---|---|
| Net Change in Fund Balances- Total Governmental Funds | 179,685 |
| Amounts reported for governmental activities in the Statement of Activities are different because: | |
| ACCRUAL OF NON-CURRENT ITEMS | |
| The amounts below included in the Statement of Activities do not provide (or require) the use of current financial resources and therefore are not reported as revenue or expenditures in the Governmental Funds (net change). | |
| Net change in post-employment benefits (OPEB) liability and deferred inflows (outflows) | 74,942 |
| Long-term compensated absences payable | 745 |
| Net change in pension liability and deferred inflows (outflows). | 730,720 |
| Unavailable revenues | 113,947 |
| Net change in lease liability | 244,640 |
| CAPITAL ASSET TRANSACTIONS | |
| Governmental Funds report capital outlays as expenditures. However in the Statement of Activities the cost of those assets is capitalized and allocated over their estimated useful lives and reported as depreciation expense | |
| Capital asset acquisition, excluding internal service fund asset acquisitions. | 1,217,507 |
| Depreciation expense is deducted from the fund balance (Net of internal service fund depreciation of $100,425). | 947,745 |
| ALLOCATION OF INTERNAL SERVICE FUND ACTIVITY | |
| Internal service funds are used by management to charge the costs of certain activities, such as insurance and fleet management, to individual funds. The net gain or loss of the internal service funds is reported with governmental activities. | 4,806 |
| Change in Net Position of Governmental Activities on Statement of Activities | 381,717 |
| Business Type Activities Endeavor Hall | Internal Service Funds | |
|---|---|---|
| ASSETS | ||
| Current Assets: | ||
| Cash And Cash Equivalents And Investments |
$ |
$ |
| Total Current Assets |
|
|
| Noncurrent Assets: | ||
| Land |
|
|
| Capital Assets Being Depreciated Net |
|
|
| Total Noncurrent Assets |
|
|
| Total Assets |
|
|
| LIABILITIES | ||
| Current Liabilities: | ||
| Accounts payable |
|
|
| Other Accounts Payable And Accrued Liabilities |
|
|
| Deposits Held for Others |
|
|
| Due to other funds |
|
|
| Total Current Liabilities |
|
|
| Noncurrent Liabilities: | ||
| Total Noncurrent Liabilities |
|
|
| Total Liabilities |
|
|
| NET POSITION | ||
| Net investment in capital assets |
|
|
| Unrestricted Net Position |
( |
|
| Total Net Position |
|
|
| Business Type Activities Endeavor Hall | Internal Service Funds | |
|---|---|---|
| OPERATING REVENUES | ||
| Charges for Services |
$ |
$ |
| Total Operating Revenues |
|
|
| OPERATING EXPENSES | ||
| Benefits Expense |
|
|
| Expenses for Institutional Support |
|
|
| Depletion, Depreciation and Amortization Expense |
|
|
| Total Operating Expenses |
|
|
| NONOPERATING REVENUES (EXPENSES) | ||
| Gain (Loss) on Sale of Capital Assets |
|
|
| Investment Income |
|
( |
| Total Nonoperating Revenues (expenses) |
|
( |
| Income (loss) before capital contributions |
( |
( |
| CAPITAL CONTRIBUTIONS | ||
| Total Capital Contributions |
|
|
| Change in net position |
( |
( |
| NET POSITION | ||
| Net position, beginning of year |
|
|
| Net position, end of year |
|
|
| Business Type Activities Endeavor Hall | Internal Service Funds | |
|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| Proceeds from Sales and Services |
$ |
$ |
| Payments to suppliers |
( |
( |
| Payments to employees |
( |
|
| Payments for Claims |
|
( |
| Net cash provided by (used in) operating activities |
( |
|
| CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES | ||
| Proceeds From Transfers In |
|
|
| Net cash flows from noncapital financing activities |
|
|
| CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES | ||
| Payments to Purchase Capital Assets |
|
( |
| Proceeds from Sale of Capital Assets |
|
|
| Net cash provided by (used in) capital and related financing activities |
|
( |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||
| Proceeds from Interest on Investments |
|
( |
| Net cash provided by (used in) investing activities |
|
( |
| Net Increase (Decrease) in Cash and Cash Equivalents |
|
( |
| CASH AND CASH EQUIVALENTS | ||
| Cash and cash equivalents, beginning of year |
|
|
| Cash and cash equivalents, end of year |
|
|
Members of the City Council City of Akutan
Akutan, Alaska
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Akutan, Alaska, as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the City of Akutan, Alaska’s basic financial statements as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Akutan, Alaska, as of June 30, 2022, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards , issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City of Akutan, Alaska, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Change in Accounting Principle
As discussed in Note 14 to the financial statements, in 2022, the City implemented GASB Statement No. 87, Leases, which established standards of accounting and financial reporting for leases by lessees and lessors. The requirements of this Statement apply to financial statements of all state and local governments.
The new standard requires the City to recognize certain lease assets and liabilities for leases. It establishes a single model for lease accounting based on the underlying principle that leases are financings of the right to use an underlying asset for a period of time. Under this Statement, a lessee is required to recognize a liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about the City’s leasing activities. Our opinion is not modified with respect to this matter.
1
3000 C Street N. Suite 201 Anchorage, Alaska 99503 Phone 907-274-2992 Fax 907-274-2993 Offices in Juneau and Soldotna A Professional Corporation
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Akutan, Alaska’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards , we:
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Accounting principles generally accepted in the United States of America require that the budgetary comparison information, Schedule of the City’s Proportionate Share of the Net Pension/OPEB Liability (Asset)- Public Employees’ Retirement System, Schedule of the City’s Contributions – Public Employees’ Retirement System, and Notes to the Required Supplementary information on pages 42 and 43-48, respectively, be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Management has omitted Management, Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Akutan, Alaska’s basic financial statements. The information listed in the table of contents as “Supplementary Information”, which includes Major Governmental funds: Schedule of Revenues, Expenditures and changes in fund balance- Budget and Actual (where applicable), Other Governmental Funds: Combining Balance Sheet, Combining Statement of Revenues, Expenditures and Changes in Fund Balances, schedule of expenditures of federal awards and notes to the schedule, as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards , are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Supplementary Information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with
Government Auditing Standards
, we have also issued our report dated March 22, 2023, on our consideration of the City of Akutan, Alaska’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City of Akutan, Alaska’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with
Government Auditing Standards
in considering City of Akutan, Alaska’s internal control over financial reporting and compliance.
Anchorage, Alaska March 22, 2023
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53
NOTES TO THE BASIC
FINANCIAL STATEMENTS
54
Notes to Basic Financial Statements
For the year ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The basic financial statements of the City of Clayton, California (City) have been prepared in conformity with generally accepted accounting principles (US GAAP) as applied to governmental agencies. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the City's accounting policies are described below.
Reporting Entity
The City of Clayton (City) is primarily a residential community nestled in the foothills of Mount Diablo in Contra Costa County, California. The City was incorporated on March 3, 1964 under the laws of the State of California, and encompasses approximately four square miles with a population of 11,700. The City operates under the Council-Manager form of government, with five elected Council members served by a full-time City Manager totaling a staff of twenty-six and a fifth (26.2) full-time equivalent employees providing the following services: public works, parks and recreation services, community and economic development, public safety, and general government. The City’s public safety program is served by an in-house police force of eleven (11) full-time sworn police officers supported by two (2) full-time administrative personnel.
The basic financial statements include the financial activities of the City, Successor Agency to the Clayton Redevelopment Agency (Successor Agency) and the Clayton Financing Authority (Authority).
The City is the primary government unit. Component units are those entities which are financially accountable to the primary government, either because the City appoints a voting majority of the component unit's board, or because the component unit will provide a financial benefit or impose a financial burden on the City. The Clayton Redevelopment Agency (“RDA”), which was dissolved as of February 1, 2012 was accounted for as a "blended" component unit of the City. Despite being legally separate, this entity was so intertwined with the City that it is, in substance, part of the City's operations. Accordingly, the balances and transactions of this component unit were reported within the funds of the City. Upon the dissolution of the RDA, the RDA ceased to be reported as a blended component unit and was replaced by the Successor Agency, which is reported as a private purpose trust fund in the fiduciary fund section of the financial statements.
The Authority is a joint exercise of powers authority duly organized and existing under and pursuant to that certain Joint Exercise of Powers Agreement, by and between the City and the former RDA of the City of Clayton with the City Council serving as the Board of Directors. It was created by the City of Clayton City Council in 1990 with the primary purpose of issuing bonded obligations to finance capital projects within the community for which repayment is secured by pledges of revenue from legally separate and distinct districts. The activities of the Authority are reported in the fiduciary fund financial statement section as the Authority’s debt is secured entirely by third parties that are not part of the primary government of the City and the City has no obligation for such debt. Separate financial statements of the Authority are available at the City’s website at www. ci. clayton. ca. gov.
55
Notes to Basic Financial Statements
For the year ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Basis of Accounting and Measurement Focus
The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses as appropriate. Government resources are allocated to and accounted for in individual funds based upon the purpose for which they are to be spent and the means by which spending activities are controlled.
Government-Wide Financial Statements
The government-wide financial statements include a Statement of Net Position and a Statement of Activities. These statements present summaries of governmental and business type activities for the City, the primary government. Fiduciary activities of the City are not included in these statements.
These financial statements are presented on an " economic resources " measurement focus and the accrual basis of accounting. Accordingly, all of the City's assets and liabilities, including capital assets and related infrastructure assets and long-term liabilities, are included in the accompanying Statement of Net Position. The Statement of Activities presents changes in net position.
Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred.
Certain types of transactions are reported as program revenues for the City in three categories:
Charges for services
Operating grants and contributions Capital grants and contributions
Certain eliminations have been made in regards to inter-fund activities, payables and receivables. All internal balances in the statement of net position have been eliminated in the statement of activities; internal service fund transactions have been eliminated. However, those transactions between governmental and business-type activities have not been eliminated. The following inter-fund activities have been eliminated:
Advances to/from other funds Due to/from other funds
Transfers in/out
56
Notes to Basic Financial Statements
For the year ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Basis of Accounting and Measurement Focus, Continued
Governmental fund financial statements include a balance sheet and a statement of revenues, expenditures and changes in fund balances for all major governmental funds and non-major funds aggregated. An accompanying schedule is presented to reconcile and explain the differences in fund balances as presented in these statements to the net position as presented in the government-wide financial statements. The City has presented all major funds that met the applicable criteria.
Governmental Fund Financial Statements
All governmental funds are accounted for on a spending or " current financial resources " measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the Balance Sheet. The statement of revenues, expenditures and changes in fund balances present increases (revenue and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period.
Revenues are recorded when received in cash, except those revenues subject to accrual (generally sixty
Deferred revenues arise when potential revenues do not meet both the "measurable" and "available" criteria for recognition in the current period. Deferred revenues also arise when the government receives resources before it has a legal claim to them, as when grant monies are received prior to incurring qualifying expenditures. In subsequent periods when both revenue recognition criteria are met or when the government has a legal claim to the resources, the deferred revenue is removed from the balance sheet and revenue is recognized.
The reconciliation of the fund financial statements to the government-wide financial statements is provided to explain the differences created by the integrated approach of GASB Statement No. 34 . The City has the following major governmental funds:
General Fund - This fund is the general operating fund of the City. It is used to account for all financial resources except those that are required to be accounted for in another fund.
57
Notes to Basic Financial Statements
For the year ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Basis of Accounting and Measurement Focus, Continued
Landscape Maintenance District – This special revenue fund accounts for the Community Facility District No. 2007-1 restricted special parcel tax approved over two-thirds the local electorate in the June 2016 election through the passing of “Measure H. ” This special parcel tax is restricted to fund the operation, maintenance, and improvement of specific city-wide public landscaped areas.
Successor Housing Agency – This special revenue fund accounts for the City’s low and moderate housing program, which was assumed by the by City Council action upon dissolution of the former redevelopment agency. Program revenue of this fund is primarily generated through the repayment on low-moderate income housing loans.
Capital Improvement Program - This capital projects fund accounts for the projects identified in the capital improvement program funded by various federal and state grants as well as through transfers from the General Fund.
Proprietary Fund Financial Statements
Proprietary fund financial statements include a statement of net position, a statement of revenues, expenses and change in fund net position, and a statement of cash flows for all proprietary funds. Internal service funds are presented in these statements. However, internal service balances and activities have been combined with the governmental activities in the government-wide financial statements.
Proprietary funds are accounted for using the " economic resources " measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the statement of net position. The statement of revenues, expenses and changes in fund net position present increases (revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which liability is incurred. Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as nonoperating expenses.
The City has the following major enterprise fund:
Endeavor Hall - This fund accounts for all activities related to use of the facility. The primary use has been for wedding receptions.
58
Notes to Basic Financial Statements
For the year ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Basis of Accounting and Measurement Focus, Continued The City has the following internal service funds:
Capital Equipment Replacement Fund - This fund accounts for the operation, maintenance, and replacement of the City vehicles and equipment.
Self-Insurance Fund - This fund accounts for the administration of the City's self-insurance programs, payment of Employee Assistance Programs, and self-insured liability claim deductibles.
Pension Rate Stabilization Fund - This fund stabilizes major fluctuations in annual employer pension costs driven by market factors and actuarial changes.
Fiduciary Fund Financial Statements
The agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations, therefore only a statement of fiduciary net position is presented. Agency funds are accounted for using the economic resources measurement focus and the accrual basis of accounting. Reclassifications were recorded to prior year amounts reported for various assets and liabilities for agency funds in order to be consistent with the current year’s presentation.
Private purpose trust funds account for resources held by the City as trustee for third party beneficiaries, and are used to report both the fiduciary net position and changes in fiduciary net position of the Successor Agency to the former Redevelopment Agency. Private purpose trust funds are accounted for under the full accrual basis of accounting.
Use of Restricted and Unrestricted Net Position
When an expense is incurred for purposes for which both restricted and unrestricted net position are available, the City's policy is to apply restricted net position first.
Cash Equivalents
For purposes of reporting cash flows for the City’s proprietary funds, pooled cash and investments held by the City are considered cash equivalents as the proprietary fund can access pooled cash and investments in a manner similar to a demand deposit.
59
Notes to Basic Financial Statements
For the year ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Cash and Investments
The City pools cash and investments from all funds for the purpose of increasing income through investment activities. Interest income on investments is allocated to the funds on the basis of average month- end cash and investment balances. Investments are carried at fair value. Fair value is based on quoted market price if applicable. Otherwise the fair value hierarchy is as follows:
Level 1 – Values are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2 – Inputs, other than quoted prices, included within Level 1 that are observable for the asset or liabilities at the measurement date.
Level 3 – Certain inputs are unobservable inputs (supported by little or no market activity, such as the City’s best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the reporting date).
Local Agency Investment Fund (LAIF) determines fair value on its investment portfolio based on market quotations for these securities where market quotations are readily available, and on amortized cost or best estimate for those securities where market value is not readily available.
The City’s investment policy (Policy) states that the primary investment objective is safety with investments being legally permitted and sufficiently liquid to meet forecasted needs. Maximization of interest earnings is a secondary objective. Further, the Policy states that the City Treasurer has the ultimate responsibility to protect, preserve and maintain cash and investments. The Policy also established internal controls and reporting requirements. The Policy stipulates "Permitted Investments and Limitation on Investments. " The City invests in the California LAIF, which is part of the Pooled Money Investment Account operated by the California State Treasurer. LAIF funds are invested in high quality money market securities and are managed to insure the safety of the portfolio. A portion of LAIF's investments are in structured notes and asset-backed securities.
Investments held with CAMP are recorded at amortized cost in accordance with GASB Statement No. 79, Certain External Investment Pools and Pool Participants . The City participates in the California Asset Management Program (CAMP) which is a voluntary investment alternative authorized by Section 53601(p) of the California Government Code. CAMP is managed by a seven-member Board of Trustees comprised of California public agency finance officials. Investments are transacted by an investment advisor and all securities are held by a third-party custodian. All securities in CAMP are purchased under the authority of Section 53601, subdivisions (a) to (n) of the California Government Code.
60
Notes to Basic Financial Statements
For the year ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Cash and Investments, Continued
Certain disclosure requirements, if applicable, for deposits and investment risks are specified in the following areas:
Interest Rate Risk Credit Risk
In addition, other disclosures are specified including use of certain methods to present deposits and investments, highly sensitive investments, credit quality at year-end and other disclosures.
Prepaid Items
Certain payments to vendors reflect costs applicable to future fiscal years and are recorded as prepaid items in both government-wide and fund financial statements. Prepaid items in governmental funds are equally offset by amounts included nonspendable fund balance which indicates that they do not constitute available spendable resources even though they are a component of net position. The cost of prepaid items is recorded as expenditures/expenses when consumed rather than when purchased.
Investment in Affordable Housing
This City Successor Housing Agency special revenue fund has purchased and re- sold several housing properties located in Stranahan Circle to low and moderate income households. The City carries the difference between the cost and sale on these properties as an investment in affordable housing until the property is either bought back by the City or sold on the open market. The City participates in the profits on any sales of these properties to an outside party in the same proportion as what the low and moderate income purchaser acquired the property from the City at the below market subsidized value. The City reports the investment in affordable housing at its proportionate equity share of the fair market value of the underlying properties at year-end. Stranahan Circle properties are considered “level 2” investments. The City values their interest in the properties annually using third party published market inputs. At June 30, 2022 the fair value was $3,170,453, which includes an increase of $131,382 for the year then ended.
Capital Assets
Capital assets are valued at cost or, during the initial implementation, estimated historical cost if actual historical cost was not available. Donated capital assets are valued at their estimated fair market value on the date donated. Donated capital assets, donated works of art and similar items, and capital assets received in a service concession arrangement are reported at acquisition value rather than fair value. City policy has set the capitalization threshold for reporting infrastructure at $100,000; all other capital assets
61
Notes to Basic Financial Statements
For the year ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Capital Assets, Continued
are set at $5,000. Depreciation is recorded on a straight-line basis over estimated useful lives of the assets as follows:
Buildings 50 years
Improvements other than buildings 20 – 75 years Vehicles, machinery and equipment 5 – 10 years
Infrastructure 20 – 75 years
In June 1999, the Governmental Accounting Standards Board (GASB) issued Statement No. 34 which requires the inclusion of infrastructure capital assets in local governments' basic financial statements. In accordance with GASB Statement No. 34, the City has included all infrastructure into the current basic financial statements. The City defines infrastructure as the basic physical assets that allow the City to function. The assets include streets, park lands, and buildings. Each major infrastructure system can be divided into subsystems. For example, the street system can be subdivided into pavement, curb and gutters, sidewalks, medians, streetlights, landscaping and land. These subsystems were not delineated in the basic financial statements. The appropriate operating department maintains information regarding the subsystems. Interest accrued during capital assets construction, if any, is capitalized for the business-type and proprietary funds as part of the asset cost. For all infrastructure systems, the City elected to use the Basic Approach as defined by GASB Statement No. 34 for infrastructure reporting. The City commissioned an appraisal of City owned infrastructure and property as of June 30, 2003. This appraisal determined the original cost, which is defined as the actual cost to acquire new property in accordance with market prices at the time of first construction/acquisition.
Original costs were developed in one of three ways: (1) historical records; (2) standard unit costs appropriate for the construction/acquisition date; or (3) present cost indexed by a reciprocal factor of the price increase from the construction/acquisition date to the current date. The accumulated depreciation, defined as the total depreciation from the date of construction/acquisition to the current date on a straight line, unrecovered cost method was computed using industry accepted life expectancies for each infrastructure subsystem. The book value was then computed by deducting the accumulated depreciation from the original cost.
Long-Term Liabilities
In the government- wide financial statements, long-term debt and other financial obligations are reported as liabilities in the appropriate activities columns. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable premium or discount. Issuance costs are reported as deferred charges.
62
Notes to Basic Financial Statements
For the year ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Long-Term Liabilities, Continued
The governmental fund financial statements do not present long-term debt, which are shown in the reconciliation of the governmental funds balance sheet to the government -wide statement of net position. Governmental funds recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financial sources. Premiums received on debt issuance are reported as other financing sources while discounts on debt issuance reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.
Compensated Absences
In the government-wide financial statements compensated absences are recorded as incurred and related expenses and liabilities are reported by activity. The long-term portion of governmental activities is liquidated primarily by the General Fund. In the governmental funds compensated absences are recorded as expenditures in the years paid, as it is the City's policy to liquidate any unpaid compensated absences at June 30th from future resources, rather than currently available financial resources. Compensated absences include vacation as well as compensated leave hours earned in-lieu of overtime. It is the policy of the City to pay up to and capped at a maximum of eighteen (18) times an employee’s capped monthly vacation accrual upon retirement or termination.
Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City’s California Public Employees’ Retirement System (CalPERS) plans (Plans) and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. CalPERS’ audited financial statements are publicly available reports that can be obtained at CalPERS’ website under Forms and Publications.
Other Post-Employment Benefits (OPEB)
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City’s plan (OPEB Plan) and additions to/deductions from the OPEB Plan’s fiduciary net position have been determined on the same basis. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms. Investments, if any, are reported at fair value.
63
Notes to Basic Financial Statements
For the year ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Other Post-Employment Benefits (OPEB), Continued
Generally accepted accounting principles require that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used:
Valuation date June 30, 2022
Measurement Date June 30, 2022
Measurement Period July 1, 2021 – June 30, 2022
Leases
The City is a lessee for noncancelable equipment leases. The City recognizes a lease liability and an intangible right-to-use asset (lease asset) in its financial statements. At the commencement of a lease, the City initially measures the lease liability at the present value of payments expected to be made during the lease term. Subsequently, the lease liability is reduced by the principal portion of lease payments made. The lease asset is initially measured as the initial amount of the lease liability. Subsequently, the lease asset is amortized on a straight-line basis over its useful life.
Key estimates and judgments related to leases include how the City determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) the lease term, and (3) lease payments.
Net Position / Fund Balances
Government-Wide Financial Statements
In the government-wide financial statements, net position is classified in the following categories:
Net Investment in Capital Assets - This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt that attributed to the acquisition, construction, or improvement of the assets.
Restricted Net Position - This amount is restricted by external creditors, grantors, contributors, or laws or regulations of other governments.
Unrestricted Net Position - This amount is all net position that do not meet the definition of "net investment in capital assets" or "restricted net position. " Nonspendable governmental funds balances are categorized as unrestricted net position on the government-wide financial statements.
64
Notes to Basic Financial Statements
For the year ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Net Position / Fund Balances, Continued Fund Balance Reporting
Equity of governmental funds are reported in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. The City Council, as the highest level of decision-making authority, commits and assigns fund balances through the passing of resolutions and ordinances, requiring an equal action for modification or rescinding thereof. It is the policy of the City to spend funds in order from restricted to unassigned, as listed below.
Fund balances for the governmental funds are made up of the following:
Non-spendable – Includes amounts that cannot be spent because they are either not in spendable form, or are legally or contractually required to be maintained intact.
Restricted – Includes amounts that should be reported as restricted when constraints placed on the use of resources are either externally imposed by creditors, grantors, contributors, or laws and regulations of other governments; or imposed by law through constitutional provisions or enabling legislation.
Committed – Includes amounts that cannot be used for any other purpose unless the government removes or changes the specified use by taking the same type of action it employed to previously commit those amounts.
Assigned – Includes amounts constrained by the government’s intent to be used for specific purposes, but are neither restricted nor committed, except for stabilization arrangements.
Unassigned – The residual funds that have not been assigned to other funds, are not non-spendable, restricted, committed, or assigned to specific purposes. The General Fund is the only fund that reports a positive unassigned fund balance.
The City Council has formally adopted a policy requiring a minimum General Fund reserve contingency of $250,000.
Property tax revenues are recognized in the fiscal year for which the tax and assessment is levied. The County of Contra Costa (County) levies, bills, and collects property taxes and special assessments for the City. The County remits the entire amount levied and handles all delinquencies, retaining interest and penalties (under the Teeter Plan). Secured and unsecured property taxes are levied on July 1 based on January 1 assessed valuation and are payable in two installments, becoming delinquent on December 10th and April 10th.
65
Notes to Basic Financial Statements
For the year ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Reclassifications
Certain prior year balances may have been reclassified in order to conform to current year presentation.
These reclassifications had no effect upon reported net position.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. In addition, estimates affect the reported amount of expenses. Actual results could differ from these estimates and assumptions.
Inter-fund Balances/Internal Balances
Outstanding balances between funds are reported as due to and due from other funds. These are generally repaid within the following fiscal year.
Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances. "
New Accounting Pronouncements
The following Governmental Accounting Standards Board Statements have been implemented in the current financial statements:
GASB Statement No. 87, “Leases”
The objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments.
This Statement will increase the usefulness of governments’ financial statements by requiring reporting of certain lease liabilities that currently are not reported. It will enhance comparability of financial statements among governments by requiring lessees and lessors to report leases under a single model.
This Statement also will enhance the decision-usefulness of the information provided to financial statement users by requiring notes to financial statements related to the timing, significance, and purpose of a government’s leasing arrangements. The implementation of this pronouncement had a material impact on the City’s financials.
66
Notes to Basic Financial Statements
For the year ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued New Accounting Pronouncements, Continued
GASB Statement No. 89, “Accounting for Interest Cost Incurred before the End of a Construction Period” The objectives of this Statement are (1) to enhance the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period and (2) to simplify accounting for interest cost incurred before the end of a construction period.
The requirements of this Statement will improve financial reporting by providing users of financial statements with more relevant information about capital assets and the cost of borrowing for a reporting period. The resulting information also will enhance the comparability of information about capital assets and the cost of borrowing for a reporting period for both governmental activities and business-type activities. The implementation of this pronouncement did not have a material impact on the City’s financials.
GASB Statement No. 92 “Omnibus 2020”
The objectives of this Statement are to enhance comparability in accounting and financial reporting and to improve the consistency of authoritative literature by addressing practice issues that have been identified during implementation and application of certain GASB Statements. This Statement addresses a variety of topics and includes specific provisions. The topics include but are not limited to leases, intra-entity transfers between a primary government and a post-employment benefit plan component unit, accounting for pensions and OPEB related assets, measurement of liabilities related to asset retirement obligations, and nonrecurring fair value measurements of assets or liabilities. The implementation of this pronouncement did not have a material impact on the City’s financials.
GASB Statement No. 93 “Replacement of Interbank Offered Rates”
The objective of this Statement is to address those and other accounting and financial reporting implications that result from the replacement of an Interbank Offer Rate (IBOR). This Statement achieves that objective by:
Providing exceptions for certain hedging derivative instruments to the hedge accounting termination provisions when an IBOR is replaced as the reference rate of the hedging derivative instrument’s variable payment
Clarifying the hedge accounting termination provisions when a hedged item is amended to replace the reference rate
Clarifying that the uncertainty related to the continued availability of IBORs does not, by itself, affect the assessment of whether the occurrence of a hedged transaction is probable
Removing LIBOR as an appropriate benchmark interest rate for the qualitative evaluation of the effectiveness of an interest rate swap
67
Notes to Basic Financial Statements
For the year ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued New Accounting Pronouncements, Continued
Identifying a Secured Overnight Financing Rate and the Effective Federal Funds Rate as appropriate benchmark interest rates for the qualitative evaluation of the effectiveness of an interest rate swap.
Clarifying the definition of reference rate, as it is used in Statement 53, as amended.
The removal of London IBOR as an appropriate benchmark interest rate is effective for reporting periods ending after December 31, 2021 (fiscal year 2022-23). The City is currently evaluating the potential impact on the City’s financials.
All other requirements of this Statement are effective for the current fiscal year, and did not have a material impact on the financial statements.
GASB Statement No. 97 “Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans – an amendment of GASB Statements No. 14 and No. 84, and a supersession of GASB Statement No. 32”
The primary objectives of this Statement are to (1) increase consistency and comparability related to the reporting of fiduciary component units in circumstances in which a potential component unit does not have a governing board and the primary government performs the duties that a governing board typically would perform; (2) mitigate costs associated with the reporting of certain defined contribution pension plans, defined contribution other postemployment benefit (OPEB) plans, and employee benefit plans other than pension plans or OPEB plans (other employee benefit plans) as fiduciary component units in fiduciary fund financial statements; and (3) enhance the relevance, consistency, and comparability of the accounting and financial reporting for Internal Revenue Code (IRC) Section 457 deferred compensation plans (Section 457 plans) that meet the definition of a pension plan and for benefits provided through those plans. The implementation of this pronouncement did not have a material impact on the City’s financials.
GASB Statement No. 98, The Annual Comprehensive Financial Report - This Statement establishes the term annual comprehensive financial report and its acronym ACFR. That new term and acronym replace instances of comprehensive annual financial report and its acronym in generally accepted accounting principles for state and local governments. The implementation of this Statement did not have a material effect on the City’s financial statements.
68
Notes to Basic Financial Statements
For the year ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Future Accounting Pronouncements
The following Governmental Accounting Standards Board Statements are effective in future years subsequent to the current financial reporting period:
GASB Statement No. 91 “Conduit Debt Obligations”
The primary objectives of this Statement are to provide a single method of reporting conduit debt obligations by issuers and eliminate diversity in practice associated with (1) commitments extended by issuers, (2) arrangements associated with conduit debt obligations, and (3) related note disclosures.
The requirements of this Statement will improve financial reporting by eliminating the existing option for issuers to report conduit debt obligations as their own liabilities, thereby ending significant diversity in practice. The clarified definition will resolve stakeholders’ uncertainty as to whether a given financing is, in fact, a conduit debt obligation. Requiring issuers to recognize liabilities associated with additional commitments extended by issuers and to recognize assets and deferred inflows of resources related to certain arrangements associated with conduit debt obligations also will eliminate diversity, thereby improving comparability in reporting by issuers. Revised disclosure requirements will provide financial statement users with better information regarding the commitments issuers extend and the likelihood that they will fulfill those commitments. That information will inform users of the potential impact of such commitments on the financial resources of issuers and help users assess issuers’ roles in conduit debt obligations.
The requirements of this Statement are effective for reporting periods beginning after December 15, 2021 (fiscal 2023). Earlier application is encouraged. The City is currently evaluating the potential impact on the City’s financials.
GASB Statement No. 94 “Public-Private and Public-Public Partnerships and Availability Payment Arrangements”
The primary objective of this Statement is to improve financial reporting by addressing issues related to public-private and public-public partnership arrangements (PPPs). As used in this Statement, a PPP is an arrangement in which a government (the transferor) contracts with an operator (a governmental or nongovernmental entity) to provide public services by conveying control of the right to operate or use a nonfinancial asset, such as infrastructure or other capital asset (the underlying PPP asset), for a period of time in an exchange or exchange-like transaction.
69
Notes to Basic Financial Statements
For the year ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Future Accounting Pronouncements, Continued
The requirements of this Statement will improve financial reporting by establishing the definitions of PPPs and APAs and providing uniform guidance on accounting and financial reporting for transactions that meet those definitions. That uniform guidance will provide more relevant and reliable information for financial statement users and create greater consistency in practice. This Statement will enhance the decision usefulness of a government’s financial statements by requiring governments to report assets and liabilities related to PPPs consistently and disclose important information about PPP transactions. The required disclosures will allow users to understand the scale and important aspects of a government’s PPPs and evaluate a government’s future obligations and assets resulting from PPP.
PPPs should be recognized and measured using the facts and circumstances that exist at the beginning of the period of implementation (or if applicable to earlier periods, the beginning of the earliest period restated). The requirements of this Statement are effective for fiscal years beginning after June 15, 2022 (fiscal year 2022-23), and all reporting periods thereafter. The City is currently evaluating the potential impact on the City’s financials.
GASB Statement No. 96 “Subscription-Based Information Technology Arrangements”
This Statement provides guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs) for government end users (governments). This Statement (1) defines a SBITA; (2) establishes that a SBITA results in a right-to-use subscription asset— an intangible asset—and a corresponding subscription liability; (3) provides the capitalization criteria for outlays other than subscription payments, including implementation costs of a SBITA; and (4) requires note disclosures regarding a SBITA. To the extent relevant, the standards for SBITAs are based on the standards established in Statement No. 87, Leases , as amended.
The requirements of this Statement will improve financial reporting by establishing a definition for SBITAs and providing uniform guidance for accounting and financial reporting for transactions that meet that definition. That definition and uniform guidance will result in greater consistency in practice. Establishing the capitalization criteria for implementation costs also will reduce diversity and improve comparability in financial reporting by governments. This Statement also will enhance the relevance and reliability of a government’s financial statements by requiring a government to report a subscription asset and subscription liability for a SBITA and to disclose essential information about the arrangement. The disclosures will allow users to understand the scale and important aspects of a government’s SBITA activities and evaluate a government’s obligations and assets resulting from SBITAs.
The requirements of this Statement are effective for fiscal years beginning after June 15, 2022 (fiscal year 2022-23), and all reporting periods thereafter. The City is currently evaluating the potential impact on the City’s financials.
70
Notes to Basic Financial Statements
For the year ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Future Accounting Pronouncements, Continued
GASB Statement No. 99, “ Omnibus 2022” - The objectives of this Statement are to enhance comparability in accounting and financial reporting and to improve the consistency of authoritative literature by addressing (1) practice issues that have been identified during implementation and application of certain GASB Statements and (2) accounting and financial reporting for financial guarantees. The practice issues addressed by this Statement are as follows:
Classification and reporting of derivative instruments within the scope of Statement No. 53, Accounting and Financial Reporting for Derivative Instruments, that do not meet the definition of either an investment derivative instrument or a hedging derivative instrument
Clarification of provisions in Statement No. 87, Leases, as amended, related to the determination of the lease term, classification of a lease as a short-term lease, recognition and measurement of a lease liability and a lease asset, and identification of lease incentives
Clarification of provisions in Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, related to (a) the determination of the public-private and public- public partnership (PPP) term and (b) recognition and measurement of installment payments and the transfer of the underlying PPP asset
Clarification of provisions in Statement No. 96, Subscription-Based Information Technology
Arrangements, related to the subscription-based information technology arrangement (SBITA) term, classification of a SBITA as a short-term SBITA, and recognition and measurement of a subscription liability
Extension of the period during which the London Interbank Offered Rate (LIBOR) is considered an appropriate benchmark interest rate for the qualitative evaluation of the effectiveness of an interest rate swap that hedges the interest rate risk of taxable debt
Accounting for the distribution of benefits as part of the Supplemental Nutrition Assistance Program (SNAP)
Disclosures related to nonmonetary transactions
Pledges of future revenues when resources are not received by the pledging government
Clarification of provisions in Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, as amended, related to the focus of the government-wide financial statements
Terminology updates related to certain provisions of Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position
Terminology used in Statement 53 to refer to resource flows statements.
The requirements related to extension of the use of LIBOR, accounting for SNAP distributions, disclosures of nonmonetary transactions, pledges of future revenues by pledging governments, clarification of certain provisions in Statement 34, as amended, and terminology updates related to Statement 53 and Statement 63 were effective for the current fiscal year and did not have a material impact on the City’s financial statements.
71
Notes to Basic Financial Statements
For the year ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Future Accounting Pronouncements, Continued
The requirements related to leases, PPPs, and SBITAs are effective for fiscal years beginning after June 15, 2022 (fiscal 2022-23), and all reporting periods thereafter.
The requirements related to financial guarantees and the classification and reporting of derivative instruments within the scope of Statement 53 are effective for fiscal years beginning after June 15, 2023 (fiscal 2023-24), and all reporting periods thereafter.
GASB Statement No. 100, “ Accounting Changes and Error Corrections–An Amendment of GASB Statement No. 62”
The primary objective of this Statement is to enhance accounting and financial reporting requirements for accounting changes and error corrections to provide more understandable, reliable, relevant, consistent, and comparable information for making decisions or assessing accountability. This Statement defines accounting changes as changes in accounting principles, changes in accounting estimates, and changes to or within the financial reporting entity and describes the transactions or other events that constitute those changes. This Statement also addresses corrections of errors in previously issued financial statements.
This Statement prescribes the accounting and financial reporting for (1) each type of accounting change and (2) error corrections. This Statement requires disclosure in notes to financial statements of descriptive information about accounting changes and error corrections, such as their nature. In addition, information about the quantitative effects on beginning balances of each accounting change and error correction should be disclosed by reporting unit in a tabular format to reconcile beginning balances as previously reported to beginning balances as restated.
The requirements of this Statement are effective for accounting changes and error corrections made in fiscal years beginning after June 15, 2023 (fiscal 2023-24), and all reporting periods thereafter. Implementation of this Statement may have a material effect on the financial statements of the City.
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72
Notes to Basic Financial Statements
For the year ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Future Accounting Pronouncements, Continued
GASB Statement No. 101, “ Compensated Absences”
This Statement requires that liabilities for compensated absences be recognized for (1) leave that has not been used and (2) leave that has been used but not yet paid in cash or settled through noncash means. A liability should be recognized for leave that has not been used if (a) the leave is attributable to services already rendered, (b) the leave accumulates, and (c) the leave is more likely than not to be used for time off or otherwise paid in cash or settled through noncash means. Leave is attributable to services already rendered when an employee has performed the services required to earn the leave. Leave that accumulates is carried forward from the reporting period in which it is earned to a future reporting period during which it may be used for time off or otherwise paid or settled. In estimating the leave that is more likely than not to be used or otherwise paid or settled, a government should consider relevant factors such as employment policies related to compensated absences and historical information about the use or payment of compensated absences. However, leave that is more likely than not to be settled through conversion to defined benefit postemployment benefits should not be included in a liability for compensated absences.
The unified recognition and measurement model in this Statement will result in a liability for compensated absences that more appropriately reflects when a government incurs an obligation. In addition, the model can be applied consistently to any type of compensated absence and will eliminate potential comparability issues between governments that offer different types of leave.
The requirements of this Statement are effective for fiscal years beginning after December 15, 2023 (fiscal 2024-25), and all reporting periods thereafter. Earlier application is encouraged. The City does not anticipate that the Statement will have a material effect on the financial statements.
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73
Notes to Basic Financial Statements
For the year ended June 30, 2022
2. CASH AND INVESTMENTS
Classification
The City’s total cash and investments, at fair value, are presented on the accompanying financial statements in the following allocation:
|
Government-Wide Statement of Net Position |
||
|
Governmental Activities |
||
|
Cash and investments |
$ |
13,441,679 |
|
Statements of Fiduciary Net Position |
||
|
Private Purpose Trust Fund |
||
|
Cash and investments |
526,807 |
|
|
Cash and investments with fiscal agents |
1 |
|
|
Agency Funds |
||
|
Cash and investments |
1,632,920 |
|
|
Cash and investments with fiscal agents |
376,103 |
|
|
Investments in bonds |
470,000 |
|
|
Total |
$ |
16,447,510 |
|
Cash and investments as of June 30, 2022 consist of the following: |
||
|
Cash on hand |
$ |
1,000 |
|
Deposits with financial institutions |
1,129,766 |
|
|
Investments |
15,316,744 |
|
|
Total |
$ |
16,447,510 |
Policy
Investments Authorized by the California Government Code and the City's Investment Policy
The following table identifies the investment types that are authorized for the City of Clayton by the California Government Code (or the City's investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the City's investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustee that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s investment policy.
|
Maximum |
Maximum |
|||||
|
Maximum |
Percentage of |
Percentage of |
||||
|
Authorized Investment Type |
Maturity |
Portfolio |
One Issuer |
|||
|
Local Agency Investment Fund (State Pool) |
N/A |
None |
$40 million |
|||
|
CAMP |
N/A |
None |
None |
|||
|
Money Market Funds |
N/A |
None |
None |
|||
|
U. S. Treasury Obligations |
5 years |
None |
None |
|||
|
U. S. Government Agency Issues |
5 years |
20% |
None |
|||
|
Bank Deposits |
N/A |
None |
None |
|||
|
Negotiable Time Certificates of Deposit |
5 years |
None |
None |
|||
|
Medium Term Corporate Bonds |
5 years |
20% |
None |
|||
74
Notes to Basic Financial Statements
For the year ended June 30, 2022
2. CASH AND INVESTMENTS, Continued
Policy, Continued
Investments Authorized by Debt Agreements
Investments of debt proceeds held by bond trustees are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City's investment policy. The table below identifies the investment types that are authorized for investments held by bond trustees. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk.
|
Maximum |
Maximum |
|||||
|
Maximum |
Percentage of |
Investment in |
||||
|
Authorized Investment Type |
Maturity |
Portfolio |
One Issuer |
|||
|
Money Market Mutual Funds |
N/A |
N/A |
N/A |
|||
|
U. S. Government Agency Issues |
5 years |
20% |
None |
|||
|
Federal Housing Administration Debentures |
N/A |
N/A |
N/A |
|||
|
Commercial paper |
92 days |
N/A |
N/A |
|||
|
Demand or time deposits |
366 days |
N/A |
N/A |
|||
Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Usually, the later the maturity of an investment the greater the sensitivity of its fair value to changes in market interest rates. Information about the sensitivity of the fair values of the City’s investments (including investments held by bond trustees) to market interest rate fluctuations is provided by the following table that shows the distribution of investments by maturity:
|
Remaining Maturity (in Months) |
|||||||||||||||||||
|
12 Months or |
13-24 |
25-36 |
37-48 |
49-60 |
|||||||||||||||
|
Investment Type |
Totals |
Less |
Months |
Months |
Months |
Months |
|||||||||||||
|
Pooled Investments: |
|||||||||||||||||||
|
Local Agency Investment |
|||||||||||||||||||
|
Fund (LAIF) |
$ |
2,962,837 |
$ |
2,962,837 |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
|||||||
|
California Asset Management |
|||||||||||||||||||
|
Program (CAMP) |
893,134 |
893,134 |
- |
- |
- |
- |
|||||||||||||
|
Certificates of Deposit |
8,759,339 |
3,192,907 |
1,072,876 |
1,365,264 |
1,872,289 |
1,256,003 |
|||||||||||||
|
Government Securities |
1,981,454 |
- |
482,325 |
137,958 |
862,826 |
498,345 |
|||||||||||||
|
Held by Bond Trustees: |
|||||||||||||||||||
|
U. S. Treasury Note |
249,980 |
249,980 |
- |
- |
- |
- |
|||||||||||||
|
Municipal Bonds |
470,000 |
470,000 |
- |
- |
- |
- |
|||||||||||||
|
Total Investments |
|||||||||||||||||||
|
$ |
15,316,744 |
$ |
7,768,858 |
$ |
1,555,201 |
$ |
1,503,222 |
$ |
2,735,115 |
$ |
1,754,348 |
||||||||
75
Notes to Basic Financial Statements
For the year ended June 30, 2022
2. CASH AND INVESTMENTS, Continued
Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code, the City's investment policy, or debt agreements, and the actual rating as of fiscal year end for each investment type.
|
Investment Type |
AAA |
AA+ |
A |
Unrated |
Total |
||||||||||
|
Pooled Investments: |
|||||||||||||||
|
Local Agency Investment |
|||||||||||||||
|
Fund (LAIF) |
$ |
- |
$ |
- |
$ |
- |
$ |
2,962,837 |
$ |
2,962,837 |
|||||
|
California Asset Management |
|||||||||||||||
|
Program (CAMP) |
893,134 |
- |
- |
- |
893,134 |
||||||||||
|
Certificates of Deposit |
- |
- |
- |
8,759,339 |
8,759,339 |
||||||||||
|
Government securities |
1,981,454 |
- |
- |
- |
1,981,454 |
||||||||||
|
Held by Bond Trustees: |
|||||||||||||||
|
U.S. Treasury Note |
- |
- |
- |
249,980 |
249,980 |
||||||||||
|
Municipal Bonds |
- |
- |
- |
470,000 |
470,000 |
||||||||||
|
Total Investments |
$ |
12,442,156 |
|||||||||||||
|
$ |
2,874,588 |
$ |
- |
$ |
- |
$ |
15,316,744 |
||||||||
Concentration of Credit Risk
This is the risk of loss attributed to the magnitude of a government’s investment in a single issuer. Accordingly, the notes to the financial statements should disclose if the government has five (5) percent or more of its total investments in a single issuer. More than five percent of the City’s investments are with the “Middle School” Community Facilities District No. 1990-1.
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counter party (e. g. broker -dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits. The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit) . The fair value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits.
76
Notes to Basic Financial Statements
For the year ended June 30, 2022
2. CASH AND INVESTMENTS, Continued
Investment Fair Value
The City has the following recurring fair value measurements as of June 30, 2022:
U. S. government agency note, certificates of deposit, Local Agency Investment Fund (LAIF), and California Asset Management Program (CAMP) values are based on unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date [Level 1 inputs].
Municipal bonds are valued based on unobservable inputs (supported by little or no market activity, such as the City’s best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the reporting date) [Level 3 inputs].
The City is a voluntary participant in the LAIF and the CAMP that are regulated by the California Government Code under the oversight of the Treasurer of the State of California. The fair value of the City's investment in this pool is reported in the accompanying financial statements at amounts based upon the City's pro-rata share of the fair value provided by LAIF and CAMP for the entire respective portfolios (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF and CAMP, which are recorded on an amortized cost basis.
3. LOANS AND NOTES RECEIVABLE
The following is a summary of loans and notes receivable of the City for the year ended June 30, 2022:
|
Balance |
Balance at |
|||||||||||
|
Successor Housing Agency: |
July 1, 2021 |
Additions |
Deletions |
June 30, 2022 |
||||||||
|
Diamond Terrace P. A. M. Note |
$ |
2,833,600 |
$ |
- |
$ |
(111,400) |
$ |
2,722,200 |
||||
|
Eden Affordable Housing Note |
567,000 |
- |
- |
567,000 |
||||||||
|
Stranahan Affordable Housing Notes |
22,350 |
- |
- |
22,350 |
||||||||
|
Total Successor Housing Agency |
3,422,950 |
- |
(111,400) |
3,311,550 |
||||||||
|
Total Notes Receivable |
$ |
3,422,950 |
$ |
- |
$ |
(111,400) |
$ |
3,311,550 |
||||
Diamond Terrace Note
On September 21, 1999, the former RDA low-moderate housing fund made a loan to the Professional Apartment Management, Inc. ("PAM") in the amount of $750,000, at a non-interest bearing rate, to construct and develop an affordable senior assisted living center on the site known as "Diamond Terrace." The note is secured by the Deed of Trust. The former RDA loaned an additional $1,286,000 on October 24, 2001. On December 1, 2003, PAM began drawing on a $2,000,000 loan from the former RDA in the amount of $200,000 annually. The principal balance is payable commencing on October 1, 2005 through October 1, 2030. The balance of the loan due to the Successor Housing Agency was $2,722,200 at June 30, 2022.
77
Notes to Basic Financial Statements
For the year ended June 30, 2022
3. LOANS AND NOTES RECEIVABLE, Continued Eden Housing Loan
On October 13, 1992, the former RDA low-moderate housing fund made a loan to the Peace Grove, Inc. in the amount of $567,000, at a non-interest bearing rate, for the purchase of land for a redevelopment and housing project for low-income mental health system clients. The loan is secured by the Deed of Trust. The principal balance is payable on December 18, 2052. As of June 30, 2022, the outstanding balance of the loan due to the Successor Housing Agency was $567,000.
Stranahan Affordable Housing Loans
The former RDA low-moderate housing fund participated in a second mortgage assistance program, whereby qualified applicants are loaned money for a "silent second" down payment to purchase a home in the Stranahan Development within the City. There are five individual loans outstanding. Interest is accrued on the principal for the first 15-35 years and then the total of accrued interest and principal is forgiven over the last 10 years of the term of the lease. As of June 30, 2022, the outstanding balance of the loans due to the Successor Agency was $22,350 of principal. The collectability of the accrued interest on these notes ($31,348) is doubtful and an allowance has been recorded to offset the full amount.
4. INTERFUND TRANSACTIONS
Due To, Due From
At June 30, 2022, the City had the following short-term interfund receivables and payables:
|
Due from |
|||||||||
|
Non-major |
|||||||||
|
Governmental |
Endeavor |
||||||||
|
Due to |
Funds |
Hall |
Total |
||||||
|
General Fund |
$ |
- |
$ |
120,983 |
$ |
120,983 |
|||
|
Total |
$ |
- |
$ |
120,983 |
$ |
120,983 |
|||
General Fund cash flow loans totaling $ 120,983 were made to Endeavor Hall. The balance of the Endeavor Hall receivable is expected to be repaid from future facility rental fees.
78
Notes to Basic Financial Statements
For the year ended June 30, 2022
4. INTERFUND TRANSACTIONS, Continued
Interfund Transfers
The following is a summary of the City’s interfund transfers for the year ended June 30, 2022:
|
Transfers In |
|||||||||||||||
|
Capital |
Non-major |
||||||||||||||
|
General |
Improvement |
Governmental |
|||||||||||||
|
Transfers Out |
Fund |
Program |
Funds |
Total |
|||||||||||
|
Landscape Management |
$ |
40,679 |
$ |
- |
$ |
1,130 |
$ |
41,809 |
|||||||
|
American Rescue Plan Act |
1,467,024 |
- |
- |
1,467,024 |
|||||||||||
|
Non-major Governmental Funds |
89,978 |
1,632,609 |
20,084 |
1,742,671 |
|||||||||||
|
Total |
$ |
1,597,681 |
$ |
1,632,609 |
$ |
21,214 |
$ |
3,251,504 |
|||||||
The City transferred money into the General Fund from the following funds: Landscape Maintenance, Gas Tax HUTA, the Grove Park District, Oakhurst Geological Hazard Abatement District, Neighborhood Street Lighting District, Measure J Grants, Grants, American Rescue Act Plan grant, and Stormwater Treatment Assessment District to reimburse the City for administrative support activities. In addition, the City transferred money into the Capital Improvement Program from Gas Tax HUTA, Gas Tax RMRA, and Measure J Grants to fund project costs associated with the Stormwater Treatment Assessment District.
5. LEASES
The City has several leasing arrangements, summarized below.
The City has accrued liabilities for two equipment leases. The discount rate used in the calculation of the lease liabilities were 3.69% and 5.00%. The remaining liability for the leases was $244,640 as of June 30, 2022. Right -to -use assets, net of amortization, for the leases totaled $216,692 as of June 30, 2022. The City is required to make principal and interest payments of $924 a month through July 2023, and $33,525 a year through September 2028.
The City’s schedule of future payments included in the measurement of the lease liability is as follows:
|
Fiscal Year |
Principal |
Interest |
Total |
|||
|
Ending June 30, |
||||||
|
2023 |
$ 44,718 |
$ 339 |
$ 45,057 |
|||
|
2024 |
33,833 |
616 |
34,449 |
|||
|
2025 |
33,014 |
511 |
33,525 |
|||
|
2026 |
33,116 |
409 |
33,525 |
|||
|
2027 |
33,217 |
307 |
33,524 |
|||
|
2028-2029 |
66,742 |
308 |
67,040 |
|||
|
Total |
$ 244,640 |
$ 2,490 |
$ 247,130 |
|||
79
Notes to Basic Financial Statements
For the year ended June 30, 2022
6. CAPITAL ASSETS
Government-Wide Financial Statements
As of June 30, 2022 the City's capital assets consisted of the following:
|
Governmental |
Business-Type |
Total |
||||||
|
Net depreciable Assets: |
Activities |
Activities |
||||||
|
Construction in progress |
$ |
1,046,789 |
$ |
- |
$ |
1,046,789 |
||
|
Land |
2,086,965 |
167,738 |
2,254,703 |
|||||
|
Total non depreciable assets |
3,133,754 |
167,738 |
3,301,492 |
|||||
|
Depreciable Assets: |
||||||||
|
Buildings |
5,937,106 |
1,400,744 |
7,337,850 |
|||||
|
Improvements |
7,660,589 |
159,579 |
7,820,168 |
|||||
|
Machinery and equipment |
1,861,599 |
5,024 |
1,866,623 |
|||||
|
Infrastructure |
33,239,930 |
- |
33,239,930 |
|||||
|
Intangible assets (right-to-use) |
254,694 |
- |
254,694 |
|||||
|
Total depreciable assets |
48,953,918 |
1,565,347 |
50,519,265 |
|||||
|
Total accumulated depreciation |
(22,971,467) |
(723,882) |
(23,695,349) |
|||||
|
Depreciable assets, net |
25,982,451 |
841,465 |
26,823,916 |
|||||
|
Total governmental activities capital assets, net |
$ |
29,116,205 |
$ |
1,009,203 |
$ |
30,125,408 |
||
The following is a summary of governmental activities capital assets transactions for the year ended June 30, 2022:
|
Balance |
Balance |
||||||||||
|
Non depreciable Assets: |
July 1, 2021 |
Additions |
Deletions |
June 30, 2022 |
|||||||
|
Construction in progress |
$ |
1,109,270 |
$ |
962,813 |
$ |
(1,025,294) |
$ |
1,046,789 |
|||
|
Land |
2,086,965 |
- |
- |
2,086,965 |
|||||||
|
Total non depreciable assets |
(1,025,294) |
||||||||||
|
3,196,235 |
962,813 |
3,133,754 |
|||||||||
|
Depreciable Assets: |
|||||||||||
|
Machinery and equipment |
1,773,780 |
153,184 |
(65,365) |
1,861,599 |
|||||||
|
Buildings |
5,937,106 |
- |
- |
5,937,106 |
|||||||
|
Improvements |
6,635,295 |
1,025,294 |
- |
7,660,589 |
|||||||
|
Infrastructure |
33,239,930 |
- |
- |
33,239,930 |
|||||||
|
Intangible assets |
- |
254,694 |
- |
254,694 |
|||||||
|
Total depreciable assets |
47,586,111 |
1,433,172 |
(65,365) |
48,953,918 |
|||||||
|
Accumulated depreciation: |
|||||||||||
|
Machinery and equipment |
(1,285,928) |
(100,425) |
65,365 |
(1,320,988) |
|||||||
|
Buildings |
(3,075,734) |
(118,580) |
- |
(3,194,314) |
|||||||
|
Improvements |
(3,239,353) |
(327,540) |
- |
(3,566,893) |
|||||||
|
Infrastructure |
(14,387,646) |
(463,624) |
- |
(14,851,270) |
|||||||
|
Intangible assets |
- |
(38,002) |
- |
(38,002) |
|||||||
|
Total accumulated depreciation |
(21,988,661) |
(1,048,171) |
65,365 |
(22,971,467) |
|||||||
|
Depreciable assets, net |
25,597,450 |
385,001 |
- |
25,982,451 |
|||||||
|
Total governmental activities |
$ |
28,793,685 |
$ |
1,347,814 |
$ |
(1,025,294) |
$ |
29,116,205 |
|||
|
capital assets, net |
|||||||||||
80
Notes to Basic Financial Statements
For the year ended June 30, 2022
6. CAPITAL ASSETS, Continued Government-Wide Financial Statements, Continued
For the year ending June 30, 2022 depreciation and amortization expense was charged to functions/programs of the governmental activities as follows:
|
General government |
$ |
81,913 |
|
Parks and recreation |
252,329 |
|
|
Public safety |
128,108 |
|
|
Public works |
585,821 |
|
|
Total depreciation expense |
$ |
1,048,171 |
The following is a summary of business-type activities capital assets transactions for the year ended June 30, 2022:
|
Balance |
Balance |
|||||||||||
|
Non depreciable Assets: |
July 1, 2021 |
Additions |
Deletions |
June 30, 2022 |
||||||||
|
Land |
$ |
167,738 |
$ |
- |
$ |
- |
$ |
167,738 |
||||
|
Total non depreciable assets |
- |
|||||||||||
|
167,738 |
- |
167,738 |
||||||||||
|
Depreciable Assets: |
||||||||||||
|
Machinery and equipment |
5,024 |
- |
- |
5,024 |
||||||||
|
Improvements |
159,579 |
- |
- |
159,579 |
||||||||
|
Buildings |
1,400,744 |
- |
- |
1,400,744 |
||||||||
|
Total depreciable assets |
- |
|||||||||||
|
1,565,347 |
- |
1,565,347 |
||||||||||
|
Accumulated depreciation: |
||||||||||||
|
Machinery and equipment |
(5,024) |
- |
- |
(5,024) |
||||||||
|
Improvements |
(153,449) |
(858) |
- |
(154,307) |
||||||||
|
Buildings |
(536,537) |
(28,014) |
- |
(564,551) |
||||||||
|
Total accumulated depreciation |
(695,009) |
(28,872) |
- |
(723,882) |
||||||||
|
Depreciable assets, net |
870,338 |
(28,872) |
- |
841,465 |
||||||||
|
Total business-type activities |
$ |
1,038,076 |
$ |
(28,872) |
$ |
- |
$ |
1,009,203 |
||||
|
capital assets, net |
||||||||||||
For the year ending June 30, 2022 depreciation expense was charged to functions/programs of the business-type activities as follows:
|
Endeavor Hall |
$ |
28,872 |
|
Total depreciation expense |
$ |
28,872 |
81
Notes to Basic Financial Statements
For the year ended June 30, 2022
6. CAPITAL ASSETS, Continued
Fund Financial Statements
The governmental fund financial statements do not present general government capital assets, which are shown in the Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position. The capital assets of the enterprise funds in the Proprietary Fund Financial Statements are the same as those shown in the business-type activities of the Government-Wide Financial Statements. Internal Service Funds' capital assets are combined with governmental activities.
7. COMPENSATED ABSENCES
Compensated absences include vacation and sick leave. It is the policy of the City to pay 100% of the capped accumulated vacation leave when a public safety employee retires or terminates, and up to 18 months of a general employee's maximum annual accrual allowed upon the same leave of employment action. The City recognizes the liability for its compensated absences in the governmental activities. The following is a summary of compensated absences transactions during the year ended June 30, 2022:
|
Beginning |
Ending |
||||||||||||
|
Balance |
Balance |
Amount Due in |
|||||||||||
|
July 1, 2021 |
Additions |
Deletions |
June 30, 2022 |
One Year |
|||||||||
|
Compensated absences |
$ |
165,747 |
$ |
131,505 |
$ |
129,962 |
$ |
167,290 |
$ |
83,645 |
|||
8. CONDUIT DEBT
The following debt issuances were issued by the City for the express purpose of providing capital financing for third parties that are not part of the primary government of the City. Although these conduit debt obligations may bear the name of the City, the City has no obligation for such debt beyond the resources provided by a lease or loan with the third party on whose behalf they are issued.
Middle School Community Facilities District- Original Issue $6,400,000
Middle School Community Facilities District (CFD) Bonds in the principal amount of $6,400,000 were issued on September 2, 1990 by the City under the Mello-Roos Community Facilities Act of 1982. Principal payments are payable on September 2 of each year. Interest payments are payable semi-annually on March 2 and September 2. The bonds are non-city obligations and are secured solely by special assessment revenue from CFD No. 1990-1. As of June 30, 2022, the outstanding balance of the non-city bond obligation was $470,000 .
82
Notes to Basic Financial Statements
For the year ended June 30, 2022
8. CONDUIT DEBT, Continued
Lydia Lane Sewer Assessment District-Original Issue $228,325
Lydia Lane Sewer Assessment District Bonds in the principal amount of $228,325 were issued on August 5, 2002 by the City. Principal payments are payable on September 2 of each year. Interest payments are payable semi-annually on March 2 and September 2. The bonds are non city obligations and are secured by sewer assessment district revenue. As of June 30, 2022, the outstanding balance of the non-city bond obligation was $133,325.
Clayton Financing Authority 2007 Special Tax Revenue Refunding Bonds-Original Issue $5,060,000
Refunding bonds were issued on May 17, 2007 by the Clayton Financing Authority in the principal amount of $5,060,000 to refund the Authority's 1997 Special Tax Revenue Refunding Bonds (the "1997 Bonds"), finance the acquisition and construction of certain public capital improvements (the Project), establish a reserve fund for the Bonds (funded part in cash and part from a reserve fund surety bond), and to pay the costs of issuance of the Bonds. The 1997 Bonds were issued to purchase the CFD 1990-1 local obligations, which are recovered by special assessment revenues from CFD 1990-1. Principal payments are payable on September 2 of each year. Interest payments are payable semi- annually on March 2 and September 2. The bonds are non city obligations and are secured by revenues received by the Authority as the result of the payment of debt service on the CFD 1990-1 Local Obligations. As of June 30, 2022, the outstanding balance of the non-city bond obligation was $420,000.
9. UNEARNED AND DEFERRED REVENUE
Deferred Revenue
Deferred inflows of resources were recorded in the fund financial statements because the funds were not available to finance expenditures of the current period. At June 30, 2022, deferred inflows of resources in the fund financial statements were as follows.
|
Successor |
Other |
Total |
|||||||||||||
|
General |
Housing |
Governmental |
Governmental |
||||||||||||
|
Deferred revenue |
Fund |
Agency |
Funds |
Funds |
|||||||||||
|
Unavailable state-mandated |
$ |
260,379 |
$ |
- |
$ |
- |
$ |
260,379 |
|||||||
|
program reimbursements |
|||||||||||||||
|
Unavailable accounts receivable |
- |
- |
332,166 |
332,166 |
|||||||||||
|
Unavailable loans receivable |
- |
2,722,200 |
- |
2,722,200 |
|||||||||||
|
Total deferred revenue |
$ |
260,379 |
$ |
2,722,200 |
$ |
332,166 |
$ |
3,314,745 |
|||||||
83
Notes to Basic Financial Statements
For the year ended June 30, 2022
10. RISK MANAGEMENT
The City participates in the Municipal Pooling Authority of Northern California (MPA), a joint powers agreement between twenty cities, which provides insurance coverage for liability, auto, property, and workers' compensation claims. Claims liabilities are accrued when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated. The MPA covers claims in an amount up to $29,000,000. The City has a deductible of $5,000 per claim for liability cases and no deductible for workers’ compensation claims. Once the City's deductible is met, the MPA becomes responsible for payment of all claims and legal defense. The MPA is governed by a board consisting of one voting representative from each member municipality. The Board controls the operations of the MPA including selection of management, approval of operating budgets, and is independent of any influence by member municipalities beyond their representation on the Board. The City's general liability and workers’ compensation premium payments made to MPA for the fiscal year ending June 30, 2021 are in accordance with formulas established by the MPA. Actual surpluses or losses are shared according to a formula developed from overall loss costs and spread to member entities on a percentage basis after a retrospective rating. Financial statements may be obtained from MPA at 1911 San Miguel Drive, Suite 200, Walnut Creek, CA 94596. The City has had no settlements which exceeded insurance coverage during fiscal year ending June 30, 2021. Estimates of incurred, but not reported, liability claims are included in the City's claims estimates and based upon historical experiences as calculated by the MPA.
11. DEFINED BENEFIT PENSION PLAN
Plan Description
The Plan is a cost-sharing multiple-employer defined benefit pension plan administered by the California Public Employees’ Retirement System (CalPERS). A full description of the pension plan benefit provisions, assumptions for funding purposes (not accounting purposes) and membership information is listed in the latest Annual Actuarial Valuation Report as of June 30, 2018. This report is a publicly available valuation report that can be obtained at CalPERS’ website under Forms and Publications. All qualified permanent and probationary employees are eligible to participate in the City’s separate Public Safety (police) and Miscellaneous (all other) defined benefit pension plans. Both the Public Safety and Miscellaneous plans are part of the public agency cost-sharing multiple employer defined benefit pension plan (PERF C), which is administered by CalPERS. PERF C consists of a Safety and Miscellaneous pool (also referred to as “risk pools”), which are comprised of individual employer safety and miscellaneous rate plans, respectively. Benefit provisions under the Plan are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be obtained from CalPERS at 400 Q Street, Sacramento, CA 95811.
84
Notes to Basic Financial Statements
For the year ended June 30, 2022
11. DEFINED BENEFIT PENSION PLAN, Continued Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service become vested and are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non- duty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law. The Plans’ provisions and benefits in effect at June 30, 2022, are summarized as follows:
|
Miscellaneous Pension Plan |
|||||
|
Tier I |
Tier II |
Tier III (PEPRA)* |
|||
|
Hire Date |
Before 7/1/2010 |
On or after |
On or after |
||
|
7/1/2020 but |
1/1/2013 |
||||
|
Before 1/1/2013 |
|||||
|
Benefit formula |
2%@55 |
2%@60 |
2%@62 |
||
|
Benefit vesting schedule |
5 years of service |
5 years of service |
5 years of service |
||
|
Benefit payments |
Monthly for life |
Monthly for life |
Monthly for life |
||
|
Minimum retirement age |
50 |
50 |
52 |
||
|
Monthly benefits, as % of |
|||||
|
eligible compensation |
1. 426% - 2. 418% |
1. 092% - 2. 418% |
1.0%-2.5% |
||
|
Safety Pension Plan |
|||||
|
Tier I |
Tier II |
Tier III (PEPRA)* |
|||
|
Hire Date |
Before 7/1/2010 |
On or after |
On or after |
||
|
7/1/2010 but |
1/1/2013 |
||||
|
Before 1/1/2013 |
|||||
|
Benefit formula |
3%@55 |
2%@50 |
2.7%@57 |
||
|
Benefit vesting schedule |
5 years of service |
5 years of service |
5 years of service |
||
|
Benefit payments |
Monthly for life |
Monthly for life |
Monthly for life |
||
|
Minimum retirement age |
50 |
50 |
50 |
||
|
Monthly benefits, as % of |
|||||
|
eligible compensation |
2.4%-3.0% |
2.0%-2.7% |
2.0%-2.7% |
||
*The California Public Employees’ Reform Act (PEPRA) was enacted in 2012 and became effective January 1, 2013.
85
Notes to Basic Financial Statements
For the year ended June 30, 2022
11. DEFINED BENEFIT PENSION PLAN, Continued
Employees Covered
At June 30, 2022 the following employees were covered by the benefit terms for each plan:
|
Miscellaneous |
Public Safety |
|||||||||||
|
Inactive employees (or their beneficiaries) |
Tier I |
Tier II |
PEPRA |
Tier I |
Tier II |
PEPRA |
||||||
|
currently receiving benefits |
27 |
7 |
1 |
28 |
7 |
1 |
||||||
|
Inactive employees entitled to but not yet |
||||||||||||
|
receiving benefits |
16 |
5 |
10 |
10 |
2 |
12 |
||||||
|
Active employees |
3 |
3 |
8 |
3 |
0 |
7 |
||||||
|
Total |
46 |
15 |
19 |
41 |
9 |
20 |
||||||
Contributions
Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through the CalPERS’ annual actuarial valuation process. The Plan’s actuarially determined rate is based on the estimated amount necessary to pay the costs of benefits earned by employees during the year, with an additional amount to pay any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.
For the year ended June 30, 2022, the City’s contractually required contributions, which are actuarially determined, were as follows:
|
Employer Contributions |
||||||||||
|
Normal Cost |
Unfunded |
|||||||||
|
Percentage of |
Actuarial |
Total |
||||||||
|
Pension Plan |
Payroll |
Liability |
||||||||
|
Miscellaneous Tier I |
$ |
46,789 |
$ |
156,440 |
$ |
203,229 |
||||
|
Miscellaneous Tier II |
25,137 |
2,371 |
27,508 |
|||||||
|
Miscellaneous PEPRA |
31,179 |
2,749 |
33,928 |
|||||||
|
Public Safety Tier I |
91,296 |
214,242 |
305,538 |
|||||||
|
Public Safety Tier II |
- |
1,729 |
1,729 |
|||||||
|
Public Safety PEPRA |
76,497 |
4,644 |
81,141 |
|||||||
|
Total |
$ |
270,898 |
$ |
382,175 |
$ |
653,073 |
||||
86
Notes to Basic Financial Statements
For the year ended June 30, 2022
11. DEFINED BENEFIT PENSION PLAN, Continued Contributions, Continued
The following is a summary of actuarially determined employer and contractually determined employee pension contribution rates as a percentage of payroll for the year ended June 30, 2022:
|
Employer |
Employee |
||
|
Pension Plan |
Contribution Rate |
Contribution Rate |
|
|
Miscellaneous Tier I |
10.34 |
7.0001 |
|
|
Miscellaneous Tier II |
8.65 |
7.000 |
|
|
Miscellaneous PEPRA |
7.59 |
6.750 |
|
|
Public Safety Tier I |
20.64 |
9.000 |
|
|
Public Safety Tier II |
18.19 |
9.000 |
|
|
Public Safety PEPRA |
13.13 |
13.000 |
|
Net Pension Liability
At June 30, 2022, the City reported total net pension liabilities for its proportionate share in both the
Miscellaneous and Safety plans as follows:
|
Proportionate |
||||||
|
Net Pension Liability |
Share of Net |
|||||
|
Pension Plan |
(Asset) |
Pension Liability |
||||
|
Miscellaneous |
$ |
1,177,421 |
0. 06201% |
|||
|
Public Safety |
1,582,318 |
0. 04509% |
||||
|
Total |
$ |
2,759,739 |
$ |
0. 05103% |
||
The City’s net pension liability was based on the proportionate shares (in dollars) determined by CalPERS based on individual actuarial measurement specific to each rate plan in the Miscellaneous Pool and the Safety Pool. The City’s total proportionate share of the cost-sharing plan pension amounts is the sum of the pension amounts allocated to each of the City’s Miscellaneous and Safety rate plans. The City’s net pension liability is measured as of June 30, 2021, using annual actuarial valuations as of June 30, 2020 rolled forward to June 30, 2021 using standard update procedures.
87
Notes to Basic Financial Statements
For the year ended June 30, 2022
11. DEFINED BENEFIT PENSION PLAN, Continued
Pension Expense, Deferred Outflows of Resources and Deferred Inflows of Resources
For the year ending June 30, 2022 the City recognized a total pension revenue of $730,721. At June 30, 2022 the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
|
Net Deferred |
||||||||||
|
Deferred |
Deferred |
Outflows / |
||||||||
|
Outflows of |
Inflows of |
(Inflows) of |
||||||||
|
Pension contributions subsequent |
Resources |
Resources |
Resources |
|||||||
|
to measurement date |
$ |
653,073 |
$ |
- |
$ |
653,073 |
||||
|
Net difference between projected |
||||||||||
|
and actual earnings on |
||||||||||
|
pension plan investments |
- |
1,969,609 |
(1,969,609) |
|||||||
|
Change in employer’s proportion |
230,195 |
52,731 |
177,464 |
|||||||
|
Changes in assumptions |
- |
- |
- |
|||||||
|
Differences between actual and |
||||||||||
|
expected experiences |
402,373 |
- |
402,373 |
|||||||
|
Differences between the employer’s |
||||||||||
|
contributions and the employer’s |
||||||||||
|
proportion share of contributions |
- |
449,044 |
(449,044) |
|||||||
|
Total |
$ |
1,285,641 |
$ |
2,471,384 |
$ |
(1,185,743) |
||||
Pension Expense, Deferred Outflows of Resources and Deferred Inflows of Resources, Continued
Of the reported deferred outflows of resources, $653,073 is related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2023 (measurement period ended June 30, 2022). Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:
|
Fiscal |
Miscellaneous |
Safety |
Total |
|||
|
Year End |
Risk Pool |
Risk Pool |
||||
|
2023 |
(235,352) |
(186,716) |
(422,068) |
|||
|
2024 |
(244,796) |
(170,259) |
(415,055) |
|||
|
2025 |
(255,792) |
(202,699) |
(458,491) |
|||
|
2026 |
(284,038) |
(259,164) |
(543,202) |
|||
|
Thereafter |
- |
- |
- |
|||
88
Notes to Basic Financial Statements
For the year ended June 30, 2022
11. DEFINED BENEFIT PENSION PLAN, Continued Discount Rate
The discount rate used to measure the total pension liability was 7. 15%. To determine whether the municipal bond rate should be used in the calculation of a discount rate for each plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing, none of the tested plans run out of assets. Therefore, the current 7. 15% discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long term expected discount rate of 7. 15% will be applied to all plans in the PERF C. The stress test results are presented in a detailed report that can be obtained from the CalPERS website at www. calpers. ca. gov.
The long-term expected rate of return on pension plan investments was determined using a building-block method in which best -estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.
In determining the long- term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical and forecasted information for all the funds’ asset classes, expected compound returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building -block approach. Using the expected nominal returns for both short-term and long- term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equal to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.
The expected real rates of return by asset class are as follows:
|
Assumed Asset |
Real Return |
Real Return |
||||||
|
Asset Class |
Allocation |
Years 1-101 |
Years 11+2 |
|||||
|
Global Equity |
50. |
00% |
4. 80% |
5. |
98% |
|||
|
Fixed Income |
28. |
00% |
1. 00% |
2. |
62% |
|||
|
Inflation Assets |
- |
0. 77% |
1. |
81% |
||||
|
Private Equity |
8. |
00% |
6. 30% |
7. |
23% |
|||
|
Real Assets |
13. |
00% |
3. 75% |
4. |
93% |
|||
|
Liquidity |
1. |
00% |
- |
-0. 92% |
||||
|
Total |
100. |
00% |
||||||
2An expected inflation of 2. 00% is used for this period
3An expected inflation of 2. 92% is used for this period.
89
Notes to Basic Financial Statements
For the year ended June 30, 2022
11. DEFINED BENEFIT PENSION PLAN, Continued Actuarial Methods and Assumptions
The following actuarial assumptions and methods were used to calculate the total pension liability as of
June 30, 2021:
Valuation Date June 30, 2020
Measurement Date June 30, 2021
Measurement Period July 1, 2020 to June 30, 2021
Discount Rate 7. 15%
Inflation 2. 50%
Salary Increase Varies by Entry Age and Service
Mortality Derived using specific CalPERS Membership Data for all Funds.
The mortality table used was developed based on CalPERS-specific data.
The table includes 15 years of mortality improvements using Society of
Actuaries Scale MP 2016. For more details on this table, please refer to the
December 2017 experience study report (based on CalPERS demographic
data from 1997 to 2015) that can be found on the CalPERS website.
Post Retirement Benefit Increase Contract COLA up to 2. 50% until Purchasing Power Protection Allowance
Floor on Purchasing Power applies.
All other actuarial assumptions used in the June 30, 2020 valuation can be obtained from CalPERS at their website at www. calpers. ca. gov under Forms and Publications.
Sensitivity of the Net Pension Liability to Changes in the Discount Rate
The following presents the City’s proportionate share of the net pension liability, calculated using the discount rate of 7.15%, as well as what the City’s proportionate share of the net pension liability/(asset) would be if it were calculated using a discount rate that is 1-percentage point lower (6.15%) or 1-percentage point higher (8.15%) than the current rate:
|
Miscellaneous |
Safety |
Total |
||||||
|
1% decrease |
6. 15% |
6. 15% |
6. 15% |
|||||
|
Net pension liability |
$ |
2,485,903 |
$ |
3,403,543 |
$ |
5,889,446 |
||
|
Current discount rate |
7. 15% |
7. 15% |
7. 15% |
|||||
|
Net pension liability |
$ |
1,177,421 |
$ |
1,582,318 |
$ |
2,759,739 |
||
|
1% increase |
8. 15% |
8. 15% |
8. 15% |
|||||
|
Net pension liability |
$ |
95,717 |
$ |
86,406 |
$ |
182,123 |
||
90
Notes to Basic Financial Statements
For the year ended June 30, 2022
11. DEFINED BENEFIT PENSION PLAN, Continued Pension Plan Fiduciary Net Position
Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports. The plan’s fiduciary net position disclosed per the GASB Statement No. 68 accounting valuation report may differ from the plan assets reported in the funding actuarial valuation report due to several reasons. For the accounting valuations, CalPERS must keep items such as deficiency reserves, fiduciary self-insurance and OPEB expense included as assets. These amounts are excluded for rate setting purposes in the City’s funding actuarial valuation. In addition, differences may result from early financial statement closing and final reconciled reserves.
12. OTHER POST-EMPLOYMENT BENEFITS (OPEB)
Plan Description
The City of Clayton Retired Employee Health Care Program is a single-employer defined benefit healthcare program administered by the City of Clayton. The program offers medical only (no dental) insurance benefits to eligible retirees and their families through the same self-insured program coverage to active City employees. In connection with this, the City has established a plan to provide post-employment benefits other than pensions as defined in California Public Employees' Retirement Law section 7500-7514. 5. The plan provides employees who retire directly from the City, at a minimum age of 50, with a minimum of five years of service, a cash subsidy for monthly medical insurance premiums to a cap of $149 per employee per month as of January 1, 2022. This monthly subsidy is the statutory minimum employer premium contribution under the California Public Employee’s Medical and Health Care Act (PEMHCA). To be eligible for this OPEB health coverage, employees must retire within 120 days of separation from employment with the City and also receive a monthly retirement warrant. Furthermore, to be eligible for retiree health benefits, the City of Clayton must still contract with CalPERS for health benefits. Once a retiree becomes eligible for Medicare, these benefits are integrated with the Medicare plan. Separate stand-alone audited financial statements are not issued for this plan.
Employees Covered
As of the June 30, 2022, the date of the latest actuarial valuation, the following current and former employees were covered by the benefit terms under the plan:
|
Active employees |
27 |
|
Inactive employees or beneficiaries currently receiving benefits |
9 |
|
Inactive employees entitled to, but not yet receiving benefits |
- |
|
Total employees |
36 |
91
Notes to Basic Financial Statements
For the year ended June 30, 2022
12. OTHER POST-EMPLOYMENT BENEFITS (OPEB), Continued Contributions
The City does not have an actuarially-determined contribution requirement as an irrevocable trust has not yet been established. The City currently administers the plan on a pay-as-you- go basis with nine (9) retirees currently receiving the PEMHCA minimum benefit. Total retiree OPEB premium payments, excluding the implicit rate subsidy of $13,410 were made by the City during the fiscal year ended June 30, 2022.
Net OPEB Liability
The City’s net OPEB liability was measured as of June 30, 2022 and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation dated June 30, 2022 that was rolled forward to determine the June 30, 2022 total OPEB liability, based on the following actuarial methods and assumptions:
Actuarial Cost Method Entry Age Normal Level Percentage of Pay (AMM)
Discount Rate 4.09%
Inflation Rate 2.50%
Payroll Growth 2.80% wage inflation
Mortality Rate PubG. H-2010 Mortality Table – General
Funded Ratio 0.00%
Health Care Trend Rates Based on 2022 Getzen model with an initial rate of 7.00%,
gradually decreasing to an ultimate rate of 3.94% by 2075
Discount Rate
As of June 30, 2022, the City has not established a dedicated irrevocable trust to pay retiree healthcare benefits. Pursuant to GASBS 75, the discount rate should be a yield or index rate for 20-year, tax- exempt general obligation municipal bonds with an average rating of AA/Aa or higher (or equivalent quality on another rating scale) . A rate of 4.09% is used, with is the Standard & Poor’s Municipal Bond 20-Year High-Grade Rate Index as of June 30, 2022.
92
Notes to Basic Financial Statements
For the year ended June 30, 2022
12. OTHER POST-EMPLOYMENT BENEFITS (OPEB), Continued
Changes in the OPEB Liability
The changes in the net OPEB liability for the plan are as follows:
|
Total OPEB |
Plan Fiduciary |
Net OPEB |
||||||||||
|
Liability |
Net Position |
Liability |
||||||||||
|
Balances as of July 1, 2021 |
$ |
532,528 |
$ |
- |
$ |
532,528 |
||||||
|
Changes recognized for the measurement period: |
||||||||||||
|
Service Cost |
18,942 |
- |
18,942 |
|||||||||
|
Interest on total OPEB liability and service cost1 |
11,706 |
- |
11,706 |
|||||||||
|
Changes of benefit terms |
- |
- |
- |
|||||||||
|
Difference between expected and actual experience |
57,970 |
- |
57,970 |
|||||||||
|
Changes of assumptions and other inputs |
(13,653) |
- |
(13,653) |
|||||||||
|
Employer contributions |
- |
29,178 |
(29,178) |
|||||||||
|
Active and inactive employee contributions |
- |
- |
- |
|||||||||
|
Net investment income |
- |
- |
- |
|||||||||
|
Benefit payments2 |
(29,178) |
(29,178) |
- |
|||||||||
|
Administrative expenses |
- |
- |
- |
|||||||||
|
Other changes |
- |
- |
- |
|||||||||
|
Net changes |
45,787 |
- |
45,787 |
|||||||||
|
Balances as of June 30, 2022 |
$ |
578,315 |
$ |
- |
$ |
578,315 |
||||||
|
cost to the end of the |
||||||||||||
|
1Service costs prior to fiscla year ended June 30, 2022 already include interest |
year |
|||||||||||
|
2Based on $15,766 in explicit benefit payments and estimated implicit subsidy payments of $ |
13,410. |
|||||||||||
Sensitivity of the Net OPEB Liability to Changes in the Discount Rate
The following presents the net OPEB liability of the City if it were calculated using a discount rate that is one percentage point lower or higher than the current rate, as of the measurement June 30, 2022 date:
|
Current |
|||||||
|
1% Decrease |
Discount Rate |
1% Increase |
|||||
|
(3.09%) |
(4.09%) |
(5.09%) |
|||||
|
Net OPEB Liability |
$ |
649,235 |
$ |
578,315 |
$ |
518,547 |
|
Sensitivity of the Net OPEB Liability to Changes in the Health Care Cost Trend Rates
The following presents the net OPEB liability of the City if it were calculated using health care cost trend rates that are one percentage point lower or one percentage point higher than the current rate, for measurement the period ended June 30, 2022:
|
6.00% |
7.00% |
8.00% |
||||
|
decreasing to |
decreasing to |
decreasing to |
||||
|
Net OPEB Liability |
2.94% |
3.94% |
4.94% |
|||
|
$ 511,513 |
$ 578,315 |
$ 659,190 |
||||
93
Notes to Basic Financial Statements
For the year ended June 30, 2022
12. OTHER POST-EMPLOYMENT BENEFITS (OPEB), Continued OPEB Plan Fiduciary Net Position
As the City has not established an irrevocable trust to pay retiree health care benefits, the plan has a fiduciary net position of $0 as of June 30, 2022.
Recognition of Deferred Outflows and Deferred Inflows of Resources
Gains and losses related to changes in total OPEB liability and fiduciary net position are recognized in OPEB expense systematically over time. Amounts are first recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and are to be recognized in future OPEB expense over an assumed expected average remaining service lifetime (EARSL) of 10.70 years.
OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB
For the fiscal year ended June 30, 2022, the City recognized OPEB expense of $74,942. The measurement date is the same as the fiscal year end date. Consequently, as of the fiscal year ended June 30, 2022, the City did not report deferred outflows and deferred inflows of resources related to OPEB from the following sources:
|
Net Deferred |
|||||||||
|
Deferred Outflows |
Deferred Inflows |
Outflows /(Inflows) |
|||||||
|
Differences between actual and |
of Resources |
of Resources |
of Resources |
||||||
|
expected experiences |
$ |
- |
$ |
- |
$ |
- |
|||
|
Changes in assumptions |
- |
- |
- |
||||||
|
Difference between expected and |
|||||||||
|
actual earnings on OPEB |
|||||||||
|
plan investments |
- |
- |
- |
||||||
|
Total |
|||||||||
|
$ |
- |
$ |
- |
$ |
- |
||||
As an irrevocable trust for payment of retiree health benefits has not been established, there are no contributions subsequent to the measurement date to report, which would otherwise be recognized as a reduction of the net OPEB liability in the following fiscal year. Other amounts reported as deferred outflows and deferred inflows of resources related to OPEB will be recognized as OPEB expense as follows:
|
Fiscal Year Ending |
Deferred Outflows |
||
|
June 30 |
/(Inflows) of Resources |
||
|
2023 |
$ |
- |
|
|
2024 |
- |
||
|
2025 |
- |
||
|
2026 |
- |
||
|
2027 |
- |
||
|
Thereafter |
- |
||
|
Total |
$ |
- |
|
94
Notes to Basic Financial Statements
For the year ended June 30, 2022
13. REDEVELOPMENT SUCCESSOR AGENCY ACTIVITIES Background
On June 28, 2011, the California State Legislature adopted two pieces of legislation - AB IX 26 and AB IX 27 (the Bill) - that eliminated redevelopment agencies and provided cities with the opportunity to preserve their redevelopment agency if they agreed to make certain payments to the County Auditor Controller. On behalf of cities and redevelopment agencies throughout the State, the League of California Cities and California Redevelopment Association requested a stay on the implementation of both pieces of legislation and filed a lawsuit with the California Supreme Court challenging both pieces of legislation. The stay was rejected and on December 29, 2011, the Supreme Court validated AB IX 26 and overturned AB IX 27. Further, the Supreme Court indicated that all redevelopment agencies in the State of California were to be dissolved and cease operations as a legal entity as of February 1, 2012.
Under the new law, redevelopment agencies in the State of California cannot enter into new projects, obligations, or commitments. Subject to the control of a newly established oversight board, remaining assets can only be used to pay enforceable obligations in existence at the date of dissolution (including the completion of any unfinished project that were subject to legally enforceable contractual commitments).
In fiscal years subsequent to the statutory dissolution date, successor agencies are only allocated revenue in the amount that is necessary to pay the estimated annual installment payments on enforceable obligations of the former redevelopment agency until all enforceable obligations of the prior redevelopment agency have been paid in full and all assets have been liquidated.
The Bill directed the California State Controller to review the propriety of any transfers of assets between redevelopment agencies and other public bodies that occurred after January 1, 2011. If the public body that received such transfers is not contractually committed to a third party for the expenditure or encumbrance of those assets, the State Controller was required to order the available assets to be transferred to the public body designated as the Successor Agency by the Bill.
Amongst numerous requirements, AB IX 26 required the following:
95
Notes to Basic Financial Statements
For the year ended June 30, 2022
13. REDEVELOPMENT SUCCESSOR AGENCY ACTIVITIES, Continued Background, Continued
As a result of the restrictions placed on the assets and liabilities of the former redevelopment agency, they were transferred to a private purpose trust fund on February 1, 2012. Prior to the transfer, the Redevelopment Agency was treated as a blended component unit of the City until the fiscal year ending June 30, 2012. On January 11, 2012, the City Council elected to become the Successor Agency to the former Redevelopment Agency in accordance with AB IX 26 as part of City resolution number 03-2012.
Subsequent to the adoption of AB IX 26 and AB IX 27, the California State Legislature adopted AB 1484 in
June 2012. Among other things, AB 1484 required the following:
The California Department of Finance (DOF) completed their review of the low and moderate income housing funds and issued a final determination letter to the City dated April 24, 2015 with no modifications. The Successor Housing Agency issued the payment specified by the DOF’s low and moderate housing funds determination letter in the fiscal year ending June 30, 2015, resulting in a net extraordinary loss of $3,616,725 for the year then ended.
On November 30, 2015, the DOF issued their final determination letter approving the all other funds DDR report with modifications. The modifications required an additional payment of $230,983 to the County Auditor-Controller, which was reported as an Extraordinary Loss of the City’s General Fund in the fiscal year ending June 30, 2016. The Successor Agency issued the payment specified by the DOF’s final all other funds determination letter to the County Auditor-Controller’s office in the fiscal year ending June 30, 2016, resulting in an extraordinary loss of $1,025,396 for the year then ended.
96
Notes to Basic Financial Statements
For the year ended June 30, 2022
13. REDEVELOPMENT SUCCESSOR AGENCY ACTIVITIES, Continued Background, Continued
Upon the DOF’s approval of the DDRs, and the distribution of unobligated funds, the Successor Agency is authorized to apply for a “Finding of Completion”. The Finding of Completion enables the Successor Agency to transfer and sell land and buildings of the former Redevelopment Agency, subject to the review and approval of a Property Management Plan by the State Department of Finance. In addition by receiving the Finding of Completion, the City may establish loans between the City and the former Redevelopment Agency as enforceable obligations. The Clayton Successor Received its finding of completion from the DOF on December 30, 2015.
Successor Agency Assets and Liabilities
Cash and Investments
The total cash and investments balance of $526,807 is presented in a format consistent with GASBS 31 and is presented at fair value. Pursuant to AB IX 26 and AB 1484, all unencumbered cash balances have been previously distributed to the County Auditor-Controller for distribution to taxing entitles. See Note 2 for further information and disclosures regarding the City’s pooled cash and investments.
Inter-Agency Loans
Notes Receivable transferred from former RDA to Successor Agency, effective February 1, 2012:
The former RDA provided assistance to special assessment districts within the City, to fund repairs and improvements. The High Street Permanent Road Division and Oak Street Sewer Assessment District received loans from the former RDA to finance necessary infrastructure improvements. These loans are secured by special assessment property tax levies within the District’s boundaries. As of June 30, 2022, the outstanding balance of the loans due to the Successor Agency was $52,607.
97
Notes to Basic Financial Statements
For the year ended June 30, 2022
13. REDEVELOPMENT SUCCESSOR AGENCY ACTIVITIES, Continued
Long-Term Debt
The following is a summary of changes in long-term debt transactions for the year ended June 30, 2022:
|
Balance |
Balance |
Due in one |
|||||||||||
|
2014 Tax Refunding |
July 1, 2021 |
Additions |
Deletions |
June 30, 2022 |
year |
||||||||
|
Allocation Bonds |
$ 1,145,000 |
$ |
- |
$ |
- |
$ |
1,145,000 |
$ |
375,000 |
||||
|
Total |
$ |
1,145,000 |
|||||||||||
|
$ 1,145,000 |
$ |
- |
$ |
- |
$ |
375,000 |
|||||||
2014 Refunding Tax Allocation Bonds
Refunding Tax Allocation Bonds, Series 2014, in the principal amount of $3,790,000 were issued on June 25, 2014 by the Successor Agency. Principal payments are payable on August 1 of each year, beginning on August 1, 2015. Interest payments are payable semi- annually on February 1 and August 1. The bonds are special obligations of the Successor Agency and are secured by the Successor Agency’s tax increment revenue.
The 2014 refunding was exercised in order to take advantage of more favorable interest rates. The refunding decreased the City’s total debt service payments by approximately $601,895. The transaction resulted in economic gain (difference between present value of the debt service on the old and new bonds) of approximately $580,184. For the current year, principal and interest paid were $0 and $30,475, respectively. The current year principal payment was made in advance, during the year ended June 30, 2021.
The annual debt service requirements to amortize the Successor Agency’s 2014 Refunding Tax Allocation Bonds outstanding at June 30, 2022, were as follows:
|
Fiscal Year |
|||||||||
|
Ending |
|||||||||
|
June 30 |
Principal |
Interest |
Total |
||||||
|
2023 |
$ |
375,000 |
$ |
22,023 |
$ |
397,023 |
|||
|
2024 |
380,000 |
13,340 |
393,340 |
||||||
|
2025 |
390,000 |
4,484 |
394,484 |
||||||
|
Total |
$ |
1,145,000 |
$ |
39,847 |
$ |
1,184,847 |
|||
98
Notes to Basic Financial Statements
For the year ended June 30, 2022
14. EQUITY BALANCES
Governmental Fund Balances
Fund balances are presented in the following categories: non-spendable, restricted, committed, assigned and unassigned (see Note 1 for a description of these categories). A detailed schedule of fund balances at June 30, 2022 is as follows:
|
Major Funds |
|||||||||||||||||||||||||||||||
|
Landscape |
Succesor |
American |
Capital |
Other |
|||||||||||||||||||||||||||
|
General |
Maintenance |
Housing |
Rescue |
Improvement |
Governmental |
||||||||||||||||||||||||||
|
Fund |
District |
Agency |
Plan Act* |
Program |
Funds |
Total |
|||||||||||||||||||||||||
|
Fund Balance Classifications |
|||||||||||||||||||||||||||||||
|
Nonspendable for: |
|||||||||||||||||||||||||||||||
|
Due from other funds |
$ |
120,893 |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
120,893 |
|||||||||||||||||
|
Prepaid expenses |
52,578 |
- |
- |
- |
- |
- |
52,578 |
||||||||||||||||||||||||
|
Total |
173,471 |
- |
- |
- |
- |
- |
173,471 |
||||||||||||||||||||||||
|
Restricted for: |
|||||||||||||||||||||||||||||||
|
Affordable housing |
- |
- |
5,617,695 |
- |
- |
- |
5,617,695 |
||||||||||||||||||||||||
|
Public landscaping |
- |
32,509 |
- |
- |
- |
- |
32,509 |
||||||||||||||||||||||||
|
Grant-funded programs |
- |
- |
- |
- |
- |
279,818 |
279,818 |
||||||||||||||||||||||||
|
The Grove Park (CFD 2006-1) |
- |
- |
- |
- |
- |
423,008 |
423,008 |
||||||||||||||||||||||||
|
Stormwater compliance |
- |
- |
- |
- |
- |
28,243 |
28,243 |
||||||||||||||||||||||||
|
Neighborhood street lighting |
- |
- |
- |
- |
- |
23,281 |
23,281 |
||||||||||||||||||||||||
|
Transportation |
- |
- |
- |
- |
- |
315,041 |
315,041 |
||||||||||||||||||||||||
|
Total |
|||||||||||||||||||||||||||||||
|
- |
32,509 |
5,617,695 |
- |
- |
1,069,391 |
6,719,595 |
|||||||||||||||||||||||||
|
Committed for: |
|||||||||||||||||||||||||||||||
|
Rainy Day |
145,620 |
- |
- |
- |
- |
- |
145,620 |
||||||||||||||||||||||||
|
Pandemic recovery reserve |
349,399 |
- |
- |
- |
- |
- |
349,399 |
||||||||||||||||||||||||
|
Presley settlement |
- |
- |
- |
- |
- |
39,478 |
39,478 |
||||||||||||||||||||||||
|
Geological hazard prevention |
|||||||||||||||||||||||||||||||
|
and repair |
- |
- |
- |
- |
- |
51,173 |
51,173 |
||||||||||||||||||||||||
|
Development impact |
- |
- |
- |
- |
- |
619,151 |
619,151 |
||||||||||||||||||||||||
|
Total |
495,019 |
- |
- |
- |
- |
709,802 |
1,204,821 |
||||||||||||||||||||||||
|
Assigned for: |
|||||||||||||||||||||||||||||||
|
Next year's budget |
- |
606,024 |
- |
- |
- |
117,685 |
723,709 |
||||||||||||||||||||||||
|
Capital projects |
- |
- |
- |
- |
2,606,444 |
- |
2,606,444 |
||||||||||||||||||||||||
|
Total |
- |
606,024 |
- |
- |
2,606,444 |
117,685 |
3,330,153 |
||||||||||||||||||||||||
|
Unassigned |
5,744,867 |
- |
- |
- |
- |
- |
5,744,867 |
||||||||||||||||||||||||
|
Total Fund Balance |
$ |
6,413,357 |
$ |
638,533 |
$ |
5,617,695 |
$ |
- |
$ |
2,606,444 |
$ |
1,896,878 |
$ |
17,172,907 |
|||||||||||||||||
*During the year ended June 30, 2022, the City established the American Rescue Plan Act (ARPA) fund to accounts for those federal monies received. Due to the specific nature of expenditures associated with ARPA, those funds are tracked and shown as committed in the General Fund.
During the year ended June 30, 2021, the City established a Rainy Day Fund. This fund was established to capture any annual surplus identified through the annual financial audit that the City Council wishes to earmark for future allocation to one-time purposes. Funds are tracked and shown as committed in the General Fund.
99
Notes to Basic Financial Statements
For the year ended June 30, 2022
14. EQUITY BALANCES, Continued
Governmental Fund Balances, Continued
The Pandemic Recovery Reserve was established by the City Council to capture programmatic funding decisions associated with the American Rescue Plan Act funds the City has received. For the initial tranche of $1,467,024 (and planned for the tranche to be received in July 2022), the City Council has chosen to transfer the funds to the City's General Fund to pay for public safety services. This funding for public safety then allows the transfer of an equal amount from the General Fund to the Pandemic Recovery Reserve. The funds in the Pandemic Recovery Reserve can be used for any valid general government purpose.
Net Position
The restricted component of net position includes assets subject to constraints either (1) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments, or (2) imposed by law through constitutional provisions or enabling legislation. The restricted component of net position at June 30, 2022 for governmental activities includes:
|
Restricted for community and economic development: |
||
|
Affordable housing |
$ |
8,788,148 |
|
Restricted for public works: |
||
|
Public landscaping (CFD 2007-1) |
32,509 |
|
|
Stormwater state mandate compliance |
28,243 |
|
|
Neighborhood street lighting |
23,281 |
|
|
Transportation |
324,585 |
|
|
Restricted for general government: |
||
|
Grant-funded programs |
240,021 |
|
|
Restricted for parks and recreation: |
||
|
The Grove Park (CFD 2006-1) |
423,008 |
|
|
Restricted for public safety: |
30,253 |
|
|
Total restricted net position |
$ |
9,890,048 |
100
Notes to Basic Financial Statements
For the year ended June 30, 2022
15. PRIOR PERIOD RESTATEMENT
During the year ended June 30, 2022, it was noted that tax revenue recognized during the year was earned during the year ended June 30, 2021. A restatement in the amount of $54,912 was made to recognize the revenue in the correct (prior) fiscal year. This restatement affected the ending fund balance/net position at June 30, 2021 as follows:
Balance at June 30, 2021, as previously
stated
Restatement
Balance at June 30, 2021, as restated
Fund Balance
of
General Fund
$ 6,108,981
54,912
$ 6,163,893
Net Position
of
Governmental
Activities
$ 44,443,106
54,912
$ 44,498,018
101